Merchant FAQ

Frequently Asked Questions by Merchants

What is interchange?

Interchange is the percentage and transaction fee charged to merchants to process credit/debit card transactions. Interchange is priced at the transaction level and depends upon the combination of industry category code, the method by which cards are accepted, the card product, and transaction size. All banks and merchant processing companies operate from the exact same interchange, dues and assessment costs.

What are dues and assessments?

Dues and assessments are processing fees merchants pay to the card associations. They are a set percentage of the sale and are generally collected on a daily or monthly basis.

What is the Durbin Amendment?

The Durbin Amendment is a component of the Dodd-Frank Wall Street Reform and Protection Act sponsored by Senator Richard Durbin (D-Ill.). The Amendment was successfully passed in 2010 to cap debit card fees for merchants. This victory for merchants offers some relief from high fees and creates a competitive market, allowing merchants to shop around for lower transaction prices. The final ruling on debit interchanges implements a base fee cap of $.21 with an allowance of $.05 to account for fraud protection costs. An additional proposed rule is in discussion that allows banks to charge an additional $.01 per transaction if they meet specific fraud prevention standards.

What is a merchant account?

A merchant account is required for your business to accept credit card payments. All money collected through your merchant account is deposited directly into your business checking account.

Merchants can choose to use Paragon as a complete solution in which we send and settle the merchant’s transactions. Paragon also offers gateway only services where we strictly send transactions to any payment processor on the market today. With our gateway solution, merchants can use a different merchant services provider to settle their transactions. Contact us today to begin the process of setting up your merchant account.

I am currently in a contract with another service provider. Can I still take advantage of Paragon’s payment processing technology through a gateway service?

We understand that sometimes a merchant cannot sever the relationship with their existing payment processor. Paragon supports a front-end connection to nearly every payment processor in the U.S. market. This set up still allows you to use Paragon’s payment technology while maintaining your relationship with your existing payment processor.

What is a Gateway agreement?

A Gateway agreement is required for a merchant to utilize Paragon’s gateway services. This agreement enables merchants to utilize Paragon’s PCI compliant payment technology services to pass transactions from the merchant’s integrated POS application to their existing payment processor.

How do I get setup for American Express?

If you have an American Express merchant ID number, provide this to us on your merchant application; or you can elect to apply for an American Express account (also on the merchant application) and Paragon will handle the account set up on your behalf.

How long does it take to set-up a merchant account?

Once we receive your signed merchant application, it generally takes between one to three business days to receive approval. Once your account has been approved you can begin processing via your integrated software solution or the Virtual Terminal. Gateway agreements are submitted for setup upon receiving a signed agreement as well as the additional information that is required from a customer’s existing payment processor. Any equipment that is ordered (PIN pad, card reader, etc.) will be shipped out upon merchant account approval or gateway account setup.

What if I do not get approved for a merchant account?

Paragon has an average approval rate of 98%. During the sales process, your account manager will go through all processing options that will best fit your business needs.

How long does it take to receive funds once a transaction has been processed?

Funds are deposited directly into your business checking account (via ACH) typically within 48-72 hours.

Can I use someone else’s merchant account to run transactions?

No, this practice is known as “credit card laundering.” Using someone else’s merchant account to process your credit card transactions can lead to heavy fines and other severe penalties. In addition, you’ll also put that merchant’s credit card processing account in jeopardy.

What kind of transaction reporting is available?

Paragon has a powerful, online reporting suite that allows merchants to manage their merchant processing account. You can review daily batch and transaction details, reconcile daily deposits, conduct detailed transaction searches, view monthly statements and much more. Transaction reporting is also available to customers who choose to use our gateway services.

Does Paragon support Canadian processing?

Paragon can facilitate merchant processing in Canada. Please contact us for additional details.

Does Paragon offer a Virtual Terminal solution?

Paragon has a virtual terminal that lets merchants securely process transactions from any Internet-capable PC.

What is a deposit? Do I need to process a deposit for every sale?

A deposit is the action of submitting your authorized transactions for payment. While an authorization places a hold on a cardholder’s available balance to cover your payment, a deposit completes the process of charging your cardholders and remitting payment to your business. In many cases, you have the option of setting your POS to automatically batch and deposit your transactions daily.

What is a credit?

A credit is a refund issued by the merchant to a customer due to a return, cancellation of a sale or data entry error. The transaction credit is deducted from the current day’s processing total.

When should I issue a credit?

A credit is required when a customer returns merchandise or cancels a sale and requests a refund on the amount of the return. If it is your store policy to not issue credits, your customer has the right to seek reimbursement through chargeback procedures.

What is a chargeback?

A chargeback is when a credit card transaction is billed back to the merchant after a sale has been settled. Chargebacks are initiated by the card issuer on behalf of the cardholder. Typical cardholder disputes involve product delivery failure or product/service dissatisfaction. The merchant’s acquiring bank will charge the merchant a fee for the retrieval of information, and if it is determined that the chargeback is valid, there will be another fee for the chargeback itself. The customer will be refunded their money directly through the credit card company and the merchant’s business checking account will be debited for the amount in dispute.

How can I avoid chargebacks?

For Card-Present Transactions:
Verify that the card number and signature on the receipt matches the number and signature on the card. Do not accept expired cards. Return policies must be printed on the sales receipt close to the signature line. Do not accept a card that looks to have been altered. Obtain authorization for the full amount of the sale. If a card is declined, do not continue to get an authorization.

For Card-Not-Present Transactions:
Make the warranty and return policies clear on your web site, in your e-mails and other communication vehicles. Use security features such as AVS to verify the billing address and ZIP code, and CVV2 to verify that the consumer is in possession of the card. Ship goods only to the cardholder’s billing address and obtain a signed proof of delivery from the shipper for delivered goods. Include a customer service telephone number in the billing name that appears on the customer’s bank statement. Never charge a cardholder’s card until the goods have been shipped. Pay special attention to international purchases since they have a greater risk of credit card fraud.

Does Paragon support Card Level II Level III Processing? What is the difference between a Level II transaction and a Level III transaction?

Yes, Paragon supports both Level II and Level III transactions. A Level II or Level III transaction contains additional data for purchase/commercial cards.

A Level II transaction includes Sales Tax Amount and Commercial Card Customer Code (many times the customer’s purchase order number). A Level III transaction includes line item data that includes details around what the consumer is purchasing. Level III transactions also include enhanced data such as a summary commodity code, ship to/from ZIP code, freight/shipping amount, etc.

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