How to get the Best Merchant Account for Your Business
Once you register with the state as a business, you can expect dozens
of offers for merchant accounts to come to you through the mail.
Most of them will be for exorbitant fees, but consider them
anyway and then do your due diligence by carefully researching the
different institutions out there for the best fit for your company.
Consider setting up a spreadsheet where you can compare the various
features and pricing of the different merchant account processing
services. Of course the fees and money will be the bottom line as
it always is but there are definitely other things to consider.
When you have got a financial service representative on the
phone, or you are assessing their website, be on the lookout for smarmy
tactics that seem to good to be true. There are definitely
unscrupulous financial lenders out there who will make the whole
experience a living nightmare when you have to deal with them regarding
problems on your monthly statement, problems with different situations
that arise, and financial institutions who will take advantage of your
inexperience by giving you unfair financial terms.
The financial terms and conditions
will be the most important point of comparison. Rates will depend
primarily on your credit history, length of time in business, and the
amount of risk factor assessed to your particular trade. Consider the
following terms and fees when comparing financial institutions:
The percentage of each transaction
paid to the merchant account processing company is called the discount rate. If your monthly charges are
less than a certain volume, the processor may charge a higher
A flat transaction fee is charged for each
Most website companies will not need to buy or
lease equipment for running credit cards. Instead, they will need
software applications for this process.
There are monthly minimum fees
merchant account provider collects each month from the merchant if
the merchant's discount rate and transaction fees don't add
up to the monthly minimum specified on the original merchant
application. For example, consider a monthly minimum fee of $25 per
month if the monthly
minimum volume isn't reached. Consider that the monthly minimum
applies to the transaction fees collected and not merely the total
sales. For example, if the merchant account provider takes a 1%
transaction fee on credit card sales, you would need $2500 in sales a
month to meet the $25 minimum monthly fee. Usually it is the flat
transaction fee and the discount rate that are combined to assess if
the monthly minimum fee has been collected.
If you own a new or high-risk business, you may be required to set
up a reserve account, which protects the processor from any future
losses. The reserve account is calculated as a percentage of your
sales. See our article on high-risk credit card processing for more information on reserve fees.
Chargeback fees are the costs charged by a
processor to cover disputed charges. These can be high fees that really affect your bottom line, so see if
your merchant account provider offers ongoing guidance on reducing the number of chargebacks or see our article for tips on lowering chargeback numbers.
If you're an e-commerce merchant, ask your prospective processor about the costs of storefront solutions
that you must have to effectively operate your Web site, such as
shopping carts, Web hosting, payment gateways, virtual terminals,
virtual checks, databases for fulfilling orders, customer tracking,
and a way to calculate tax and shipping charges.
Most merchant banks offer a help desk service. The business owner is able to make contact for basic support information like transaction history and technical support. The help desk assists the customer with transaction information should there be some problem.
Make sure whatever merchant company you use has reliable phone support available at times that are convenient and acceptable to you and your customers. Also test whether there is a long hold time or busy signals that prevent the customer from getting customer service that is acceptable. Are the customer service representatives able to answer questions quickly and in a manner that is easy for the novice to
understand? Are they polite and helpful?
Online Merchant Account Support
merchant accounts have online support to help the merchant resolve
problems with payment matters.
Live chat is usually used
for urgent matters such as the cessation of transactions from the
account or the inability to access the transaction area. Email support
handles non-urgent informational issues that the help desk does not
handle and website problems. Does the merchant bank you are
considering have both options available? How soon will they
respond to an email you have regarding a problem. Do they send
you information tailored to your specific question or a generic form
letter? Do they urge you to browse the website for the answers
you are looking for whether you already have done that or not?
Policies such as the ones mentioned can really give you a headache
when you are trying to get different problems resolved and carry on
with making money for your business!
One of the
broader support areas is
website support. Website support may only come with additional
fees, but they should be utilized because they can be very helpful to
the business owner. This allows for account testing,
hosting and implementation of the software. The technicians handle a
greater deal of the website activity and do more to ensure the security
and smoothness of the credit card transactions. Otherwise, if the
credit card processing area of your website is down for whatever reason
and you cannot resolve it on your own immediately, this can cost you
thousands of dollars in lost sales.
Merchant training is available in the form of informational
booklets and software programs that give an overview of the account set
up, background information and means for accessing further information.
It will also give information on how to maintain the merchant account
online, how to access reporting, troubleshooting and who to contact for
what sort of problems.
You should assess any possible merchant account company for the above forms of support because although you may not foresee having any problems, they will undoubtedly happen in even the best of arrangements and the best preparation. You want to deal with a company that handles your problems in a professional and timely manner and who offers the amount of support you feel is necessary to your business. The amount of customer processor service and the willingness of the company to go the extra mile can make all the difference in times of crisis and to the overall success and health of your business.