If you are setting up a new business, you need to know how to set up a merchant account for credit card processing. This is something that most people have never had to do in the past and can be a daunting task because without a merchant account you cannot take credit card payments. However, once you know what you need to do, this process will seem easier.
What Is A Merchant Account?
Before you look at setting up a merchant account, you need to know what this is. A merchant account is a business account that allows you to accept payments from not only credit cards, but debit cards and other electronic forms of payment. Many different types of business will require a merchant account from retailers to service businesses. If you are going to be starting an e-commerce business, a merchant account is vital to success.
When you have a merchant account, you will take payment from customers via cards or other payments. The merchant account provider will then process the payment and ensure that all transactions are completed. To get this service, you will have to pay a fee for the merchant account.
Who Provides A Merchant Account?
Knowing that you need a merchant account is important, but you also need to know who provides these accounts. A merchant account provider can be a bank or another financial institute such as Highrisk Solutions. There are also some other businesses that operate as merchant account providers where you can apply for a merchant account.
Know What Your Business Needs In A Merchant Account Before Looking For One
The first step in setting up a merchant account is determining what your business actually needs in a merchant account. This means that you have to determine how your business is going to be accepting payments which will be processed by the merchant account provider. There are a number of options when it comes to taking payments and you need to choose the best one for your business.
You could have a virtual terminal which is a web application that allows you to accept payments through internet connected computers. You can also have a smart terminal or a POS terminal which reads the cards in your physical store. Some merchant accounts will allow you to accept payments on a tablet or mobile phone while others take online payments and recurring billing options.
What your business needs should be determined before you look or communicate with any merchant services. You also need to have an idea of the number of transactions per month you are expecting because many merchant account providers have fees based on sales volume. Once you know what you need from the merchant account, you will be able to look at what is on offer.
Compare Merchant Account Providers
You should never sign up to the first merchant account provider that you find. They might offer everything that your business needs, but they may not have the best rates, and this is something you have to consider. There are a number of considerations that you need to be aware of when you are comparing different merchant providers.
The primary consideration is the fees that you will be charged. Merchant account providers will either have a fate rate, a tiered rate or an interchange plus rate. The flat rate will be a set percentage and per transaction fee which is charged while the tiered rate will vary depending on the type of transaction being processed. Interchange plus rates will have a set percentage and per transaction rate which varies depending on the type of transaction but will be based on the interchange costs.
Many people believe that interchange plus rates are the best because they are set on the interchange that all processors use. Tiered systems might seem to be a good option, but this will depend on the type of transaction you are going to be processing. If you only process high-cost transactions, this fee structure could eat into your profits and this is something you want to avoid.
Know About Additional Charges
While the transaction fees will generally be fairly transparent, there are other charges that the provider might have. You need to find out about these fees before you make any decisions on which provider to use. Some of the additional charges you could face include batch fees, statement fees, cancellation fees, annual fees and monthly limit fees.
High cancellation fees are a red flag that you should look out for and you need to avoid any providers that have them. These providers will rely on their cancellation fees to make their profits and this will not be in your best interests. You should also consider the monthly transaction fees where you are charged for going over a set number of transactions in a month or not reaching a set number of transactions in a month.
Be Honest With The Merchant Provider
Once you have found a merchant account provider that offers everything you need and has fees that you agree with, you need to apply for an account. There are times when it is tempting to omit information from your application to increase the chances of approval. This is something that you should avoid doing at all times because the consequences are not worth it.
When the merchant account provider finds out that you have lied to them, they will terminate your account and you might get blacklisted. This will make it harder for you to get an account with another merchant account provider. In these cases, you will need to turn to high-risk merchant account provider who will charge you more for your account.
Being honest with the provider is better because they understand the risks associated with your business. You will also have a better relationship with the provider when you are open about everything. This will include any rejections in the past as well as the type of business you have and the products you are going to be selling.
