“What Lawyers Need to Know: Changing Requirements for Credit Card Processing” by Sensei’s Sharon Nelson and John Simek was featured in the December 2017 issue of the San Bernardino Bar Association Bulletin.
The first step in processing credit cards is getting a merchant account. A merchant account is essentially
a contract with a “processor” that takes your transactions and processes them with the credit card
companies (e.g. MasterCard, VISA, American Express, Discover, etc.). When you work with a processor,
you will pay a variety of fees (e.g. discount percentage, transaction fee, etc.) for each one of your credit
card transactions. Typically, the discount percentage will go down as you gather more and more
information to validate the transactions. As an example, the discount rate will be lower if you have the
cardholder’s complete address (including zip code) and CVV (card verification value) versus only having
the billing zip code. Companies such as LawPay, Sage Payment Solutions, Square and Authorize.net are
credit card processors.