The process of applying for a merchant services account to enable your business to accept credit card payments can be daunting and confusing. Here are eight things you should consider in comparing account services plans and rates.
1. Method of Customer Payment
The primary decision driving the selection of a merchant services account is the required means by which customers will pay. Different solutions are available for “card present” scenarios as opposed to online credit card purchases. Some business will need the ability to accept e-checks, and others will want to investigate cutting edge technologies now available to accept payments with a card reader and smartphone. Always begin by considering what payment methods will best serve your customers.
2. Projected Business Volume
The projected monthly business volume has a direct bearing on the fees associated with the merchant service account. Some small business, for instance, think that using PayPal is the best and easiest solution, but if their monthly sales volume exceeds $2000, they will actually lose money on PayPal fees and limits. In the vast majority of cases, a merchant services account is the better, more flexible option. You will also want to understand what mechanisms are in place to upgrade the account when monthly sales volume increases, and how that will affect the fee structure of the account.
3. Security Solutions in Place
One reason consumers say they prefer using a credit card over cash is a perception of greater security in terms of being able to get their money back should they be dissatisfied with the transaction. This is offset, however, by valid concerns about identity theft and fraud. Any merchant services account under consideration should have solid security protocols in place that meet the Payment Card Industry (PCI) Data Security Standard. Preferably the package will also include management software to help the merchant spot suspicious card activity that could indicate fraud is taking place.
4. Equipment and Software
Equipment will be needed to capture the consumer’s credit card information, which is typically a purchase item for the merchant. Depending on the applicable payment model (normally determined by location), this expense can start at $200 and go up. Obviously this requirement is directly tied to the location or venue where the payments will be received. Business owners need to weigh the pros and cons of purchasing equipment over leasing, especially if there are hefty fees for the return of the terminal if the account is canceled.
5. Overall Costs
Regard all fees as exactly what they are, a drain on business resources. The lower the fee structure, the better. Fees are based on such factors as projected business volume, location of the business, and nature of the business. If your endeavor is regarded as high risk, you will be faced with paying higher fees regardless. Make sure you understand all associated rates including the transaction fee, discount fee, and gateway fee. If you are quoted a “tier” price, ask for a breakdown of what that entails exactly.
A chargeback is an instance in which the charge is reversed — essentially the money is returned — to the consumer because something has gone wrong with the transaction. If you have a reason to believe that your business will entail a high number of chargebacks, you will likely find yourself classed as high risk. Merchants should take all precautions to minimize chargebacks and from the onset must understand all the consequences in terms of fees they will incur when a chargeback proves necessary.
7. Available Customer and Tech Support
Make sure the company you are considering has dedicated customer support and technical support staff. You want to be able to get in touch with both support departments 24 hours a day, especially if you’re not running a 9-5 business yourself. (And don’t forget you may well be in a different time zone than your merchant service provider.) Make sure you have access to the information and technical help you need to keep your business running smoothly and to address any issues that arise with your customers and orders without delay. Anything less is a liability to your business.
8. Applicant’s Credit Status
Your own credit status may well affect your application for a merchant service account. However, it is often the case that your own view of your credit and its actual effect on your application are not in line. Always discuss things like past bankruptcy filings, tax liens, and other issues with the provider’s representative. Full disclosure is the best policy, since many of these issues can be addressed to successfully complete your account application.