ince I attended the Northeast Acquirers' Association (NEAA) and National Association of Payment Professionals (NAOPP) events in Mt. Snow, VT, I've been thinking about two things: 1) the lack of merchant level salesperson (MLS) representation at the NAOPP event and 2) the lack of knowledge that some of our associates have about our industry.

While listening to Linda Ford of CardSystems Solutions explain the backbone of our industry and answer questions from members of the audience, I realized that many people do not understand the basics of this industry.

When my partner Dimitrios and I got started in the industry five years ago, our training consisted of getting the merchant agreement and being told, "go get 'em, tiger." I had hoped training had improved since then.

At our company, Alpha Card Services, Inc., we offer a sales training program called Alpha University. In the following paragraphs, I will address the most frequently asked questions we hear during the training. I highly recommend that if your ISO partner offers any type of training, you should commit yourself to it.

The knowledge you gain will go a long way in making you a productive member of this industry and will help you generate profit in the long run.

Who gets interchange?

After reading the nine-part "Interchange Untangled" series in The Green Sheet, you should be familiar with interchange and how it affects different transactions. Every ISO and bank, no matter its size, has to pay interchange.

Interchange is paid each and everyday to issuing banks. Issuing banks not only earn interest on the money they lend to their cardholders, but more importantly, they earn a percentage of the sale from the merchants. For example, when an MBNA cardholder uses his or her card at an Alpha Card Services merchant, Alpha Card Services does not get the interchange-MBNA does.

Who gets the dues and assessments?

Dues and assessments are part of the transaction fees that are paid to the credit card associations, such as Visa and MasterCard, for the network of member banks they have built.

Who gets the transaction fees?

Every transaction fee that each merchant is charged includes three parts: interchange, network fees and ISO/agent profit. We know that depending on the card type and interchange level we can pay anywhere from $0.02 to $0.15 to the issuing banks. Also, depending on the network through which we choose to process the transaction, there can be up to an additional $0.11 per transaction cost. Anything over the interchange and network fees is the ISO/agent profit.

If there are discount rates and transaction fees, how can a company get away with charging a bundled rate?

Typically merchants are charged both a discount rate and a transaction fee per sale. However, in some cases they are charged a flat rate, which combines a discount rate and a transaction fee.

See the "Example" box on this page.

How does the transaction approval process work?

One thing I always like to say is that it would take me longer to explain the actual process of the transaction/sale than it would to complete the sale. We all know a credit card must be processed through some type of terminal, whether it is a physical, virtual or some type of touch-tone service.

Following are general steps involved n processing a transaction:

1. The merchant or customer swipes or punches the card number, expiration date, sales amount and any other required information depending on card or sale type.
2. The terminal contacts the servers of the network that the merchant is using (Vital, Maverick, Global, etc).
3. The network locates the BIN on the card and contacts the issuing bank to inquire about fund availability.
4. The issuing bank's servers issue an approval/decline code depending on fund availability, which is transmitted through the network to the terminal.

How often should merchants close their batch?

In order to qualify for the best possible interchange level, every merchant should 'batch out' every single day. If a transaction is not batched within 24 hours of its authorization, it will get downgraded to a different interchange level.

If a Visa transaction is not batched within seven days of authorization, or a MasterCard transaction within 30 days, the authorization falls off and must be re-submitted.

What is a retrieval request?

A retrieval request is the issuer's request for all hardcopy sales drafts from a particular sale.

As NPC states on its Web site, MasterCard requires that all retrieval requests be fulfilled electronically through the MasterCom electronic image process system, while Visa will allow requests to be fulfilled through the mail along with Visa's Copy Request Manager System.

If the retrieval requests are ignored they will eventually lead to a chargeback.

What is a chargeback?

When a cardholder disputes a transaction, it is handled through a chargeback or compliance case. In the case of a chargeback, the issuer returns a transaction to the acquirer, and the acquirer debits the payment previously paid to the merchant.

Chargebacks are the result of either cardholder disputes or violations of rules by the merchant or acquirer; chargebacks help enforce operating rules and correct transaction errors. The issuer always initiates the first chargeback.

A chargeback can occur when the issuer finds an error in the transaction, or if there is a cardholder complaint. MasterCard and Visa have developed procedures for submitting and processing chargebacks.

By learning this industry inside and out, you're giving yourself all the tools to be successful for the long haul. If your ISO doesn't offer training, do not use this as an excuse. With some hard work on your part, you can become very knowledgeable-perhaps even a selling machine!

For those of you who are truly serious about learning more about our industry, I suggest you visit The Green Sheet Online's various forums. I also recommend reading "Good Selling!" and "Good Selling! 2" by Paul Green and "How to Survive and Thrive in the Merchant Services Industry" by Marc J. Beauchamp and William Graham.

If you still have questions, don't hesitate to post them on The Green Sheet MLS Forum, or you may e-mail me directly at lkalemis@alphacard-us.com. I will either answer the question or guide you to the proper source.

Lazaros Kalemis is President of Alpha Card Services, Inc.