Rainbow Data, Inc.



 Merchant Account Q & A
 [ Merchant Account Q& A | Glossary ]

How do Internet credit card transaction work?
There are two ways a web based merchant can accept credit cards from their customers: Live Real-Time payments and non-Real-Time. See below:

1) Customer visits your website, shops, and wants to pay with a credit card. Customer enters in the credit card information.

2) Based on the type of merchant account the merchant has, Real-Time or non-Real-Time, The card information can flow one of two ways. Real-Time: the card information flows to the processing center/payment gateway. Or non-Real-Time: the merchant captures the credit card information via a secured form and than manually enters in the card information to the processing center/payment gateway.

3) The processor/bank verifies the card information and either approves or declines the card holder.

4) If card holder is approved the amount is moved from the card holders bank to the merchant's processing bank. The merchant's processing bank than moves the money to the merchant's local checking account. The transaction is complete.

Why don't I just go to my local bank?
Unfortunately, when it comes to smaller businesses, especially home based businesses, most banks will not approve this type of account.

How do I apply?
Just fill out the
online application and return it to us. We will do a pre-approval. Once pre-approved, we will send you that paperwork to sign. This process normally takes 5 working days.

What if my application is declined?
Very few applicants are declined. If you are declined you have no obligation, so why not

I have a bad credit rating, is this a problem?
Probably not. Most applications are declined due to current bankruptcy or tax lien. There are no hassles, no strict credit requirements, and NO FEE TO APPLY, so why not

What equipment do I get? Must I purchase it, or can I lease it?
You have the option of many state-of-the-art electronic terminals. The equipment may be purchased or leased.

What are my leasing options?
You can get a one, two, three, or four year lease. These are all lease-to-own plans. The lease has a 10% buy out option at the end. It is a business lease and therefore 100% tax-deductible. Just as important, it will not show up on your personal credit report as a credit liability.

Can I use my computer, instead of a terminal to process the sales?
Yes, you can purchase or lease the software for the same amount as the electronic terminal.

Do I receive any training on the equipment?
We will contact you when your terminal arrives to fully train you on all equipment at NO charge.

Is there a Merchant service phone number that I can call if I need help?
You will be provided with an (800) number to handle any questions.

What are discount points?
Every bank charges discount points to merchants. Discount points are the percentage of each transaction that the processing company charges to handle the transaction for you. Our discount points are exceptionally low, starting at just 1.56%.

When can I expect the money from the sales to appear in my bank account?
Usually, the money will appear in your account within 2-5 business days after you have reconciled your daily business.

Why don't you display the rate for Discover card acceptance?
Discover/novus has taken the position that they want to establish service directly but only AFTER a Visa and MasterCard merchant has been established. Therefore no other company can quote rates or sign up a merchant for Discover service. Once you establish service with our company we will notify Discover to contact you.

What is the year 2000 problem? In order to save storage space on electronic devices, including credit card terminals, many programmers allowed only the last two digits to represent the year in dates. Unfortunately, these devices will recognize the notation 00 as referring to the year 1900. Credit cards expiring in the year 2000 have already been issued, and some credit card terminals treat these cards as having expired in the year 1900. All our equipment and software is year 2000 compliant.



[ Merchant Account Q& A | Glossary ]

This glossary provides definitions for many of the terms used in the bankcard industry.

Account number
A unique sequence of numbers assigned to a cardholder account that identifies the issuer and type of financial transaction card.

A licensed member that maintains the merchant relationship and acquires the data relating to a transaction from the merchant or card acceptor and submits that data into interchange, either directly or indirectly.

A process defined in operations regulations whereby a transaction is approved by or on behalf of an issuer; commonly understood to be receiving of a sales validation by the merchant, by telephone, or authorization terminal.

Automated Teller Machine (ATM)
An unattended, magnetic stripe-reading terminal that dispenses cash; accepts deposits and loan payments; enables a bank customer to order transfers among accounts and make account inquiries.

A debit or credit card issued by a bank or other financial institution, such as a MasterCard® or Maestro card.

Bank Rate
Also known as "Discount Rate". This is a percentage of each sale that the bank charges as per Visa and MasterCard Rate requirements. All banks are required to have at least 3 rate structures. Face to face retail (usually the lowest rate e.g.. 1.49%). Phone, Mail and Internet rates (usually higher e.g.. 2.24%). And a rate for imprinted or phone authorized rates (highest rate e.g.. 2.62%). It is very important to correctly classify the way you will accept credit cards so that you can achieve the best rate structure

The customer to whom a card has been issued or the individual authorized to use the card.

Cash disbursement
A transaction that is posted to a cardholder's MasterCard card account in which the cardholder receives cash at an ATM, or cash or travelers checks at a branch of a member financial institution or at a qualified and approved agent of a member financial institution.

The process of exchanging financial transaction details between an acquirer and an issuer to facilitate posting of a cardholder's account and reconciliation of a customer's settlement position.

Cobranded card
A credit card issued jointly by a member bank and a merchant, bearing the "brand" of both.

Corporate card
A bankcard issued to companies for use by company employees. The liability for abuse of the card typically rests with the company and not with the employee.

Credit card
A plastic card bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis.

Currency conversion
The process by which the transaction currency is converted into the currency of settlement or the currency of the issuer for the purpose of facilitating transaction authorization, clearing and settlement reporting. The currency of transaction is determined by the acquirer; the currency of the issuer is the preferred currency used by the issuer, and most often, the currency in which the cardholder will be billed.

Debit card
A plastic card used to initiate a debit transaction. In general, these transactions are used primarily to purchase goods and services and to obtain cash, for which the cardholder's asset account is debited by the issuer.

Electronic Commerce Indicator (ECI)
A system in which the transaction data from an Internet transaction is tagged with this indicator and sent on to Visa or MasterCard. It is a requirement (October1st, 2000) for all merchants with a majority of sales via the Internet to use an approved and ECI compliant payment gateway. Hand keying of credit card numbers in to standard credit card terminals would not capture and pass on the ECI, therefore this method is not compliant

Electronic draft capture (EDC)
A system in which the transaction data is captured at the merchant location for processing and storage.

Electronic funds transfer (EFT)
A paperless transfer of funds initiated from a terminal, computer, telephone instrument, or magnetic tape.

The process of printing identifying data on a bankcard in the form of raised characters.

Most credit card transactions are conducted electronically by using Electronic Draft Capture (see EDC). Typically this is performed by terminal (like the Verifone Tranz 330), Software or via the Internet.

A device supplied to the merchant to produce an image of the embossed characters of the bankcard on all copies of sales drafts and credit slips.

The member that enters into a contractual agreement with MasterCard to issue MasterCard® cards.

Magnetic stripe
The magnetically encoded stripe on the bankcard plastic that contains information pertinent to the cardholder account. The physical and magnetic characteristics of the magnetic stripe are specified in ISO Standards 7810, 7811, and 7813.

Magnetic stripe reader
A device that reads information recorded on the magnetic stripe of a card.

Mail Order/Telephone Order (MO/TO)
A transaction initiated by mail or telephone to be debited or credited to a bankcard account.

An institution that participates in the programs offered by MasterCard International Incorporated.

A retailer, or any other person, firm, or corporation that (pursuant to a merchant agreement) agrees to accept credit cards, debit cards, or both, when properly presented.

Merchant bank
A bank that has entered into an agreement with a merchant to accept deposits generated by bankcard transactions; also called the acquirer or acquiring bank.

Personal identification number (PIN)
A four-to-12 character secret code that allows an issuer to positively authenticate the cardholder for the purpose of approving an ATM or terminal transaction occurring at a point-of-interaction device.

Purchasing card
Designed to help companies maintain control of purchases while reducing the administrative cost associated with authorizing, tracking, paying, and reconciling those purchases.

A hard-copy document representing a transaction that took place at the point of sale, with a description that usually includes: date, merchant name/location, primary account number, amount and reference number.

The process by which merchant and cardholder banks exchange financial data and value resulting from sales transactions, cash disbursements and merchandise credits.

Third-party processing
Processing of transactions by parties acting under contract to issuers or acquirers.

Action between a cardholder and a merchant or a cardholder and a member that results in activity on the cardholder account.

Transaction date
The date a cardholder effects a card purchase of goods, services, or other things of value, or effects a cash disbursement.