Is there a way to accept credit cards without a merchant bank? Doing
your own processing? If so, how? I know it's possible to accept cards
without the gateway but doing it yourself but what about without the
bank? Maybe directly?

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Request for Question Clarification by mvguy-ga on 12 Jun 2002 22:34 PDT

Do you wish to accept credit cards online or in person? 

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Clarification of Question by brainfox-ga on 13 Jun 2002 01:23 PDT

100% of our transactions are over the internet, hence MOTO. 
 
I see another comment that shows that my secondary comments were not
read. PLEASE if you are gong to answer this question, READ all
responses. 

Hi,

As you've obviously discovered, most online payment processing
providers are merely "middle-men" who take a cut of all your
transactions and send them to a merchant bank for actual processing.
All such providers require that you have a merchant account, and most
will help you with getting a merchant account if you don't already
have one.

In your question you ask if you can accept credit cards not only
without a merchant account but also without using a bank at all. The
short answer is - almost!

There are now several solutions for accepting credit cards without
having a merchant account, but the only way you can process credit
cards without using a bank at all would be if you *were* a bank! The
reason for this is simple - the bank that issued the customer's credit
card will only transfer funds to another merchant bank, not to an
individual person.

The good news is that you don't need to have a merchant account.
Although several of the people posting comments on this question
recommend PayPal, which does allow customers to use their own credit
cards, it's not really a "professional" solution. PayPal is seen by
many customers as the "mom & pop" approach, and from your perspective
as a seller there are two major problems: first and foremost the
customer has to be a PayPal member, even before they can use their
credit card to pay you! Membership is free, but many customers
wouldn't like to have to take that extra step when they can simply
enter their credit card directly on your competitors' Web sites. The
second problem is that the customer's credit card bill shows "PayPal"
as the payee, not your company name.

Having built several e-commerce Web sites myself, the best solution
I've found is Revecom.com (http://revecom.com). They offer a one-stop
payment processing system which doesn't require a merchant account and
addresses both the PayPal shortcomings: customers can pay directly
with their credit card, and they put your company name on the
customer's credit card statement (see
http://revecom.com/faq/index.htm#250). Finally, Revecom.com accepts
payments from anywhere in the world, in nearly any currency, and
allows you to host your site in any country, not just in the US or
Canada as required by many merchant payment systems. They also provide
great tracking and analysis tools - you can email all your customers
who bought the red t-shirt to offer them a new product, for example,
and they give you statistics on your individual products' sales
performance.

Finally, I'm giving an "honorable mention" to Echo, Inc.
(http://echo-inc.com/) because, although they still require a merchant
account, they are a one-stop payment processor - i.e. they are both
the gateway *and* the bank, so you're not paying extra "middle-man"
processing fees.

I hope I've given you enough information to answer your question.

windowswizard-ga

An A+ for effort, a C- for answering the question.

If you are looking to do this online, look into http://www.paypal.com.
I can't get you a link to the site right now because it's down for
maintanence. They will allow you to accept credit cards without a
merchant account since it will go thru them. There is a fee associated
with it too. I think it's about 30 cents + 2.? % if you are a normal
premium user. If you are a merchant user (over $1000 of transactions a
month), the fee goes down to about 30 cents + 0.7%.
It's pretty simple to add paypal to your website, they even provide a
way to simply add shopping carts and stuff for you.

If you live in the and its probably the same for out side UK. You will
need to contact the bank to get a credit card machine like you see in
the shops that accept your visa cards etc... Make sure your allowed to
use it with mail / internet orders. Then what you do is all the credit
card details you obtain via your orders you will need to display then
on the computer screen (on SSL) and then manually type them in.

That is how we work and its good, but not very good if you plan on
having allot of orders. As it is a bit time consuming approximately 4
minutes per order.

Many thanks.

I see my point is missed. Rest assured we are not a new at this, I
have been processing credit cards for the past 15 years and there is
very little most can't tell me expect this question asked.
Unfortunately my contacts with visa net and novus offer little help in
these areas which is why I turned to google.

In regards to PayPal, they are a "third-party" processor. Our main
objective is to avoid the middle man, with PayPal, not only will we
not avoid the middle man but we will add two more companies into the
picture.

As for the second comment, again, we are not new to this. We process
over 500 orders a day and I am very familiar with every aspect of this
process from the acquiring bank to the gateway processing.

Let me make this clear, we are a merchant, as a regular merchant, the
process is simple.

Client - Merchant - Gateway - Clients Bank - Our Bank

What we want to do here is simple, we have already eliminated one part
by going direct through visa net so now it's

Client - Merchant - Client Bank - Our Bank

What we need to know is how do we go

Client - Merchant - Client Bank

Simple.

Please, no novices here. We need someone who has hardcore moto, visa
net, gateway experience here.

I hope I don't seem harsh here, that is really not my intent but I
don't want to waist anyone's time, especially my with second rate
answers.

You can accept credit cards easily without having any merchant account
or paying high prices to get merchant accounts.
I outline the following two options depending on physical presence of
your business or in person:

1. In USA
Must go for PayPal, easiest way to accept payments online, 
https://www.paypal.com/affil/pal=R63KHSP225MCL
They provide electronic clearence system. Your payment will be
transfered to you in your bank account. Also their commission charges
are very low.


2. Outside USA
Accept payments (credit cards) in US$ or Canadian$, with 2CheckOut
Inc.,
http://www.2checkout.com/cgi-bin/aff.2c?affid=23092
All major credit cards, Visa, Master, Amex, Discover are accepted with
one time setup fees of $49 and no monthly charges. Commission rates
are $0.45 + 5.5% on per transaction. You may get your money through
Air mail check in US$ or low cost wire transfer to your local bank in
your country.

If you need further information feel free to contact.

Hemant Kumar

I see another comment that shows that my secondary comments were not
read. PLEASE if you are gong to answer this question, READ all
responses.

I hear you. How about this then, use http://www.iShopBuilder.co.uk.
The let you process the payments offline so you can have:

Client -> Merchant -> Your Bank, without incurring any extra per
transaction charges.

I hope this helps.

Goosh

Hi brainfox, 

Just a quick note:  The people offering suggestions in the commentary
are doing only that - offering suggestions.  Comments are usually
independent of the content of anyone else's content, a case of several
people with an idea or two, but nothing concrete, just trying to help
you brainstorm.  Please don't be too frustrated with them, they're
just free ideas, you're not charged for them.

To make certain that whoever *does* answer your question sees your
secondary comments, you might want to post them up in the "Clarify
Question" box, where they will be immediately noticed.

I think you need to step back and look at the reasons behind the way
card transaction processing works. To do what you are asking, Client
-> Merchant -> Client Bank, you must have some kind of infrastructure
to get from yourself as a merchant to the cardholder's (client as you
term it) Issuing bank.
NO-ONE WILL GIVE YOU THAT FOR NOTHING. You HAVE to go through someone
else (3rd party processor, acquiring member etc) or set yourself up as
such but I have a strong suspicion from your question that you are not
quite in that position.

If you need any more clarity on this, just ask....

Regards.

missy-ga - I completely understand what you are saying about
"suggestions" or even "comments", that's more than fair but when it
comes to Google, I guess my expectations are a bit high.

Had I been looking for simple "suggestions", I would have gone to a
message board or some sort of un paid forum. Fact is my interpretation
was that Google answers was a place for professional research, not
simply a free for all of suggestions and comments.

meltdown-ga - I understand the infrastructure, in fact, much better
than most. As for getting something for free, I don't have a clue
where that came from. We spend $1,000.00 a day just for the sole
purpose of processing our daily transactions.

Our objective is two fold, #1 - The gain more control in processing
these transactions by illuminating a link in the chain and #2 - to
ensure that the ultimate success of these transactions is at our
discretion, not that our a security department that we will never
meet.

I appreciate comments, I really do but like many business owners, I am
a very busy person and don't need comments, while comments would be
appreciated in a normal open discussion forum, I need answers.

Don't get me wrong, we expect nothing for free and are willing to pay
for the offset of one less link in the chain. Fact is, this is
possible, I just need to know how.

P.S. Fact is, a couple of these post are more than simple comments but
rather a marketing attempt. If you look, many of the suggested
services use affiliate base coding, a clear sign of a biased comment.
My hope is that my $25.00 research fee is enough to allow for a
neutral comment.

You may want to consider CCVS or Credit Card Verification System.  

This is proprietary software which was developed by Redhat which was
recently discontinued.  The software essentially uses your computer's
modem to emulate the protocols of a credit card swipe box.  Though it
is just software.  The reason this information might be useful depends
on how telephone based credit card processing rates compare to
internet based rates.  Just as with online processing, there are a
number of protocols out there and each they often map to different
sets of banks.    What makes CCVS special are the programming APIs
that CCVS offers.  APIs are offered for the following languages: C,
java, perl, python, php3, and tcl.  From what I can see, the CCVS API
gives you a great deal of control over the transaction.  The interface
does not just try to make online credit card processing possible; it
attempts to make all situations of credit card processing possible. 
And from the API docs it seems to do a decent job; though I have no
direct experience using the software.

You might now be asking, "How can I use modem based software for an
internet site?"  I have two answers for you, depending on the size of
your operation.  If you have a big enough site you will probably want
to get a dedicated server, in which case who ever is running it for
you can install a modem; whether it's a remote server or in your
office.  If you don't plan on having a dedicated server, you can
always do batch processing.  Have your site take orders and send them
to a trusted computer at your office or home where the credit card
processing is done.

Anyway, I suggest you download the documentation at: 
http://www.redhat.com/docs/manuals/ccvs/

You can also download the software at the following redhat mirror:
ftp://ftp.crc.ca/pub/systems/linux/redhat/ftp.redhat.com/ccvs/current/

The software is somewhat shady to use since it is closed and
discontinued, but it seems like it is perfectly functional. I'm not
sure of the licensing either.

I've dropped redhat a line concerning the shadyness of the software
and when they reply I'll add a comment.

This hasn't been a complete answer to your question, but at least now
you know traditional telephony swipe protocols are available to you in
the form of programming language APIs.

You might also want to check out the The World Wide Web Security FAQ [
http://www.w3.org/Security/Faq/wwwsf5.html ].

Around question 13, there is interesting though brief and somewhat
dated information on secure Internet credit card processing options.

PayPal is a poor substitute for a real merchant account.  The closest
thing there is to a real merchant account (other than ccnow.com, which
overcharges) is http://www.propay.com

In order to collect CC numbers, go to http://www.mals-e.com/ and
install that shopping cart. It's free.

Firstly, my comments are totally neutral I am not affiliated to any
card scheme, 3rd party, vendor or whatever and don’t give a monkey's
what you end up doing.

Your comment:
"To ensure that the ultimate success of these transactions is at our
discretion, not that our (sic) a security department that we will
never
meet."

Is a nightmare for any cardholder and I hope I misunderstood.

You cannot just deem to take on your own risk management without
adherering to the card schemes' operating regulations, which is what,
from a reasonable view of your question (though fragmented) you are
trying to achieve.
I know, I know, you think (and may be right) your current acquirer's
are a load of s*** and maybe don't fight the disputes in the way you
want. But the rules are there and pretty reasonable IMHO for the
protection of all parties to the transaction. As you well know MOTO is
probably the most risky of all transactions by volume.

At the risk of pissing off Google, with all due respect you are asking
a question that can not possibly be answered in this forum (especially
with your constantly evolving agenda) with a few pages of response.
Having said that BIG players like airline reservation systems put in
the investment and have a similar kind of solution to the one you
desire. If you think you are up for that, go straight to the card
schemes themselves and see if  they are interested

I hope I am not wasting your time….

Regards,

You want a good answer. Here it is.

No !. You can't. You want to process transactions directly on the
interchange system, and do the ACH'ing No, there is NO way you can
process transaction direcly on the interchange system, without going
thru an acquiring bank. Visa and MC regulations prohibit such an act.
Even when you process AMEX or Discover transactions they go thru
acquiring banks. You cannot access the Federal Reserves ACH system if
you are not a bank, so if you cant ACH then you cant transfer funds,
so therefore you cannot process credit cards. Even if you are going
thru Visa Net, you are still going thru an acquiring bank.

OK this is quite simple..  and I do see were you are coming from. 

  The problem is your model, It's that it displays one client bank. 

  It is possible to process credit card transactions with out a
merchant bank in the way. you would become a card acquirer and this is
the only way I know that you can do it.

  You are a obviously aware there several credit card schemes the most
well known are MasterCard, visa , American Express and the lesser
known Dinners club and others.

  To make a credit card scheme work you have card issuers and card
acquires. One to issue the card and one to take payments from people
using the card.


Card Issuers Role in the Credit Card Scheme

  A card issuer joins a card scheme such as Visa, This enables them to
give customers cards with the visa logo on it. So it could be MBNA,
Natwest, Barclaycard and a million and one other issuers. Some of
these card issuers only allow you to spend your money on certain
things such as the co-operative visa card prohibits the use of there
card for gambling purchases.


Card Aquirers Role in the Credit Card Scheme
  
  A Card Acquire issues merchant service accounts to business that
wish to accept credit cards. all transactions on the terminals are
directed to the Acquire for processing. The card aquirer aslo has to
join the credit card scheme rules it wish to process the transactions
of. ie Join MasterCard, Vias, American Express. The Aquirer like the
Issuer has to abide by the rules of the particular schemes for
proccessing the Credit Cards of the Scheme.

  A Card acquirer has agreements with a number of Card Issuers for
transactions costs. With out these agreements in place an acquirer
could not accept payments made by credit cards belonging to the card
issuer and explains why when you go for a merchant account they ask
which cards do you want to accept and what denomination they as there
are monetary conversions to take into account. This explains why
transaction costs are different for  cards issued in different part of
the world, even if they are issued by the same Issuer.


Third Party Proccessors

  DataCash (for example) is a third party Card processor like all the
other requires you to have a Merchant account But it is important to
know that they have to create partnerships or agreements with
acquirers to be able to process the merchant account.

  For example The Third party Processor may only have an agreement
with Streamline and not Barclaycard. so if you as a business had a
merchant account with Barclaycard the Third party processor could not
help you.

  One thing that has happened which is quite unique or at least was 12
months ago, Companies such as DataCash operated a reverse billing
service for the gaming industry where by they came to an arrangement
with a card issuer that would allow them to pay directly on to the
card any winnings the purchaser had won.

  This little trick was equivalent to a charge back but avoided all
the red tape and investigation the acquirer is obliged to do as part
of the credit card scheme.


Your Answer

  So with all this firmly in our grasp. the answer to your questions
is there is only one possible way for you to process the cards
yourself direct with the card issuer and that is to become a card
acquirer. You do not have to be a bank just a finical institution with
a lot of money behind you.

  All in all (and I have looked into all of this for my business
clients) it?s not worth time unless you are a major player in the
financial world. Processing millions a day.


  Hope this helps you understand what it will take to achieve your goal.

   IT Mogo.