Information on Merchant Accounts,
Ecommerce and Credit Card Processing

February 15th, 2006 by Jamie Estep

IP – Broadband Credit Card Processing

Filed in: Credit Card Equipment, Merchant Accounts |

Broadband Credit Card Processing

Broadband internet is now the standard for most businesses and homes. Naturally with the increased speed and usability, phone line technologies are migrating to broadband. Credit card processing, which is build around the conventional phone networks, is also making the move to broadband.

All popular terminal manufacturers are moving toward broadband technologies, and each manufacturer is making broadband capable terminals. Processing banks have been slow to pick up the new technology that operates completely differently from phone based equipment. The Verifone Omni 3740 and the Omni 3750 are the two terminals with the best support for broadband processing.

Each of these terminals is available in both phone and Ethernet capable models. There is also a dual communication module that allows the use of both standard phone lines and IP based broadband connections.

How does broadband processing work?
Unlike a phone line, a broadband or IP based connection is always on. A credit card terminal is connected securely to a processing server similar to the way a computer web browser connects to a website. This server connection allows the credit card terminal to communicate with the processing server in order to process transactions. The whole process is done very rapidly and eliminates the need to dial out on a phone line, because the terminal is always connected.

Why is broadband processing better?
The main benefit of a broadband processing terminal is the increased speed and security in processing. A broadband capable terminal will also free up an extra phone line, and since most businesses already have a broadband internet connection, minimal hardware is needed to connect the terminal to the internet.

The Drawbacks:
Currently, not all processing banks support IP based processing. There is a lot of extra equipment that is needed to support broadband processing, and the extra cost has made for a slow transition. It can also be difficult to initially configure. All broadband connections are different because of the hardware configurations used to setup a network, so there can be compatibility problems when setting up a terminal for broadband processing.

What is needed to process over a broadband connection:
The first thing needed would be a broadband capable terminal. Next, a broadband internet service, DSL, Cable, Satellite, or other broadband internet connection is needed for access to the internet. Lastly a free space on a router or directly through a broadband modem to connect the terminal to.

Once configured, IP based processing is faster, cheaper, and more convenient than processing through a standard phone line. If you have an existing Omni 3740 or 3750 you can buy a dual comm module and setup an IP processing service for it. The module will cost you about $100.

Related Posts:
Convert an Omni 3740 or 3750 for Ethernet Processing

February 14th, 2006 by Jamie Estep

Level 1, 2, and 3 credit card processing

Filed in: Merchant Accounts | 1 comment

The credit card processing system is setup on a three level system. These levels of requirements are made to determine if a certain transaction is a qualified transaction. A qualified transaction will ensure that the business gets the lowest qualified processing rate that they are signed up with.

If the criteria for being qualified is not met, the transaction downgrades. When a transaction downgrades, an additional processing and/or transaction fee is also assessed on the transaction. Downgrade charges can be costly for some businesses do it is important to know what is required for a transaction to be qualified.

Processing Level Qualification Chart

This chart explains exactly how much information needs to be passed through the processing system for a level 1, 2 or 3 transaction to not-downgrade and remain qualified, for the lowest possible processing rate.

Data Type

Level 1

Level 2

Level 3

Merchant Name


Transaction Amount




Tax Amount

  X X

Customer Code (16 Char)

  X X

Merchant Postal Code

  X X

Tax Identification

  X X

Merchant Minority Code

  X X

Merchant State Code

  X X

Item Product Code


Item Description


Item Quantity


Item Unit of Measure


Item Extended Amount


Item Net / Gross Indicator


Item Tax Amount


Item Tax Rate


Item Tax Identifier


Item Discount Indicator


Ship from Postal Code


Freight Amount


Duty Amount


Destination Postal Code


Destination Country Code


Alternate Tax Amount


Level 1 transaction are your standard retail transaction. The card holder is using a personal credit card issued from an American bank.

Level 2 transaction are normally corporate cards issued from an American bank.

Level 3 transaction are government credit cards or corporate cards.

Level 1 and 2 transactions can be run through a standard credit card terminal or PC processing program if setup correctly. Level 3 transactions require special software to transmit the extra information required to qualify the transaction.

Businesses that have many downgrades due to corporate and government card acceptance should look into a level 2 or level 3 processing solution to avoid downgrading.

Reference Posts:
What Does All This Mean? – Merchant Account Fees
Why am I downgrading? – Part 1/3 – Reasons
Why am I downgrading? – Part 2/3 – Preventing
Why am I downgrading? – Part 3/3 – Case Studies

February 13th, 2006 by Jamie Estep

WiFi Credit Card Processing

Filed in: Credit Card Equipment, Merchant Accounts | 1 comment

Wireless credit card processing through a WiFi connection is becoming available for businesses in the US. WiFi is simply a standard of connecting devices together to create a wireless network. WiFi delivers broadband speed and function but eliminates wired connections from the system. WiFi promises to deliver the same function, that has made it so popular with computer networking, to credit card processing.

Credit card processing is slowly moving out of the telephone age and into the WiFi age. Several credit card terminals are already WiFi capable or WiFi ready. A WiFi terminal will operate over a wireless broadband connection and offer a convenience never previously seen in credit card processing. Upscale restaurants, shops, and many mobile businesses are already looking into the benefits of WiFi processing…

WiFi Credit Card Processing


February 10th, 2006 by Jamie Estep

Paying with a credit card in a foreign country…

Filed in: Merchant Accounts |

When people travel they often use their credit card. Their credit card will usually work with the same speed and convenience as it will in the US. Even if the charge is in another currency, the whole process is smooth and efficient.

But, when you get your next monthly statement you may notice something called a Forex charge.

When you pay for something is a country with a currency other than your own you are often charged a Forex or foreign exchange fee. This fee can vary be from 1% up to 5 or 6% of the total amount of the transaction. Visa and Mastercard both charge a 1% fee for making a currency exchange. Most card issuing banks will add an additional 2% on top of that, but several banks have 4 and 5% currency exchange fees.

If you make $3,000 worth of purchases on your credit card, then you could pay an additional $180 in currency exchange fees. If this amount is on your credit card balance then you will also be paying interest on your currency exchange fees.

While this fee is probably unavoidable, you should at the very least, plan for it. Talk to your bank and see what they charge. Add 1% to their charge and that is the minimum you should expect to pay in currency exchange fees for your credit card purchases. An extra $200 is a lot of money when you’re not actually getting anything for it.

February 8th, 2006 by Jamie Estep

Parts of a Credit Card Machine

Filed in: Credit Card Equipment | 1 comment

  1. Printer – Prints transaction and batch receipts. Can be thermal, impact, or ink.
  2. Printer Paper – Specifically made for the type of printer the credit card machine is using. Heat is used to produce the receipt image on thermal paper. Impact paper uses carbon to create the receipt image. An ink printer uses ink ribbons or cartridges like a computer.
  3. Display – Shows user information about the transaction or function they are currently operating.
  4. Keypad – Allows manual keying of transaction, and aids in completing some functions.
  5. Soft Keys – Programmed keys to perform specific functions including programming, batching, returning, voiding, etc.
  6. Magnetic Card Reader – Magnetically captures information contained on the credit card. Type 1, 2, and 3 card readers are available, and each reads a different portion of the magnetic strip.
  7. Smart Card Reader – Some terminals allow a business to process smart card embedded credit cards in replacement of the magnetic strip.

  1. Ports – RS232 and other peripheral ports allow printers, pinpads, smart card readers and other peripherals to be attached.
  2. Power Plug – Provides power to the terminal via an AC adapter. Some terminals are able to operate from battery power.
  3. Phone Jack – Connects the terminal to a phone line, allowing the terminal to dial the processing network and process a transaction.

* Different terminals have different configurations and parts, this guide is meant only to diagram the basic parts of most credit card machines. Check the description of a particular machine for the specifics of that machine.

January 24th, 2006 by Jamie Estep

SSL Certificates for Online Merchants

Filed in: Ecommerce, Merchant Accounts |

When processing credit card and other electronic forms of payment over the internet, security is a major concern. A SSL (Secure Socket Layer) certificate enables your website to maintain a secure connection between the user and your website. To access a web page over a secure connection, all you need to do is replace the ‘http://’ with ‘https://’ in the address bar. The extra ‘s’ denotes that you would like the connection to be secure. When a secure connection is established, a small padlock will appear in the lower right corner of the web browser window.

A secure certificate can be obtained in 1 of 2 ways…

Generating your own certificate:
SSL Certificate ErrorYou can generate your own certificate through your web server or web host if they allow it. This method is easy and theoretically perfectly secure, but when you do this, your visitors will be prompted with an ugly error message, as seen in the picture on the right, if they try to access your website through a secure connection.

Buying a certificate from a trusted issuer:
By purchasing a certificate from a trusted issuer, you will eliminate the ugly error message associated with generating your own certificate, but you will also be showing your visitors that you care enough about their security, that you site is secured by a trusted 3rd party organization. When you setup a certificate with a trusted company, they will normally do some sort of business verification to ensure you are who you claim to be. Once approved by the issuer, you will generate a document called a CSR (Certificate Signing Request) with your web server. This document contains pertained information to your business and website, and is encrypted. The issuer will then verify that the encrypted data is correct and matches to the data that they have about your company. Once verified, they will issue a secure certificate, and you can copy and past the encrypted code into the correct file on your web server.

Now when you type, instead of, a small lock will appear in the lower right corner of the site indicating the site is secure.

Common Problems:
The most common problems when getting setup with a SSL certificate are not specifying the correct sub domain when your certificate is issued, and having non-secure elements on a web page.

Incorrect Sub Domain:
When you setup your certificate you must specify the exact url the SSL is going to be applied to. is not the same as If you setup a SSL certificate for the www version, it will not work for the non-www version, and vice-versa. Make sure you do this right from the start, as most issuers will not give you a second chance if you mess this up.

Non-secure elements on a web page:
Sometimes your certificate is setup and installed, and you get an error message about a page containing insecure items on it. This is normally caused by images or javascript that are linked from a non-secure version of the website.

For images Use:
<img src="./images/thispict.jpg"/>
and not:
<img src=""/>

The second image will create an error message, because it is not hosted on a secure domain as denoted by the address (http://).

Where to get a SSL Certificate:
SSL certificates vary in price from one trusted issuer to another, even though they do the exact same thing. When you get a SSL from a 3rd party, you are paying for the endorsement of their name as well as the security. A very well trusted organization like Verisign charges more for a secure certificate than a less know issuer. You are also paying for the verification process. The more in depth the verification process, the more expensive the certificate is, and the more trusted the name of the issuer is.

Recommended certificate issuers by price (L to H):
Godaddy SSL:

January 23rd, 2006 by Jamie Estep

Why are some companies offering free credit card terminals with their merchant accounts?

Filed in: Credit Card Equipment, Merchant Accounts, My Favorite Posts |

Free Credit Card Terminal Merchant Accounts

The big craze in the merchant account industry is the new free credit card machine offers that many providers are offering.

About 20 years ago up until about 6 years ago, free credit card terminals were a fairly common practice in the payment processing industry. It was standard for banks and merchant service providers to offer a Tranz 330 or Zon Jr. to their customers, especially for the larger ones. Until last year, the free credit card terminal offers had all but disappeared. Brought back again in full force by a company called United BankCard, the free terminal offers have become very popular over the past year. Many merchant service providers have followed suite and are now offering free terminals to their new customers.


January 19th, 2006 by Jamie Estep

New Look

Filed in: Industry News |

The blog has been redesigned. It is plain, but very clean and it now utilizes the whole page. I am hoping to post more in the coming months. I have been so busy that the blog has been neglected a bit. Things should smooth out in a couple of weeks.

In the meantime, let me know any topics that you would like to see here.

January 12th, 2006 by Jamie Estep

Setting up an Ecommerce Website

Filed in: Ecommerce, Merchant Accounts, My Favorite Posts |

Ecommerce WebsiteBuilding a proper website is the foundation of any ecommerce business. Failure in creating a proper website can guaranty the failure of the online business itself.

There are several options for creating a website. Depending on how new the business owner is to web programming, and the planned budget, the options are either creating a website personally, or outsource your ecommerce website.

View the entire, Guide to setting up an ecommerce website.

December 28th, 2005 by Jamie Estep

Accepting Gift Cards

Filed in: Credit Card Equipment, Merchant Accounts |

Often overlooked, gift cards are one of the most effective customer retention and marketing methods available to businesses.

There are 2 types of commonly used gift cards. The first is the Visa or MasterCard branded gift cards that work just like a credit or debit card. While convenient, these gift cards don’t offer much benefit to most businesses. The second type of gift card is a proprietary self branded gift card, that is essentially an electronic gift certificate. These gift cards also work just like a standard credit or debit card, but are limited to being spent at your own company. For many businesses, these are one of the most effective customer retention and marketing mediums available.