Merchant accounts allow businesses to accept payment for goods or services via credit cards. They are contracts between an acquiring bank who extends a line of credit to the merchant.

Did you know that customers are more likely to purchase from businesses that offer credit card facilities? Statistics show that businesses using merchant accounts can see an immediate increase in the number of sales. These statistics are based on the average cash sale being only $9, while the average credit card sale is approximately $40.

Regardless of the type of business, the availability of merchant accounts will definitely improve your cash flow in several ways. Below are some benefits for using merchant accounts:

- Having credit card facilities means customers can purchase right on the spot.

- Processing fees for merchant accounts can be lower than check transaction fees.

- Issues about debt collection will become the bank’s problem, not yours.

There are obvious and clear benefits to having merchant account facilities in your business. There are also drawbacks that should be examined as well.

- You will have to institute measures to protect your business from credit card fraud.

- You may need to examine and possibly revise your policies concerning charge-backs and refunds to minimize damages.

- If you accept credit card payments via your website, be certain youre using fraud protection measures to minimize scams, thefts and fraudulent charges

Setting Up Merchant Accounts

Setting up a merchant account can be relatively simple. You will need to set up a bank account for your company for the proceeds of any credit card purchases to be credited to. You will also need to lease processing equipment and software that will facilitate transactions.

If you’re planning to process credit cards via your company’s website, then you’ll need to register with a payment gateway like VirtualNet or CyberCash. You should also make sure that the merchant account software you’re using will be compatible with your online payment gateway.

Merchant Account Comparisons

Before you call your bank to get a merchant account, take the time to compare the options and offerings of several different banking institutions, in addition to merchant account providers. Fees and charges often vary greatly, so its very important to check what you’ll be charged and what fees are likely for each transaction.

For example, fees could include initial start-up costs, monthly lease fees for equipment, transaction fees…even sales volume costs and processing fees. Ask any potential provider for a written list of all the fees you’ll be charged so you can compare them accurately with other vendors.

Merchant Account Charges and Fees

Most providers will charge some form of application fee. This can vary from $0 up to $100 and sometimes more depending on your lender.

You will also need to pay for your software, which will have an initial cost of around $80-$100. Once the software is installed, you’ll then have to pay the licensing lease on the software, which could be anywhere between $20-$50 per month. Once again it depends on your lender.

On top of these, you will incur transaction fees that range between $0.20-$0.50 per transaction. While these don’t sound high, if you process a lot of transactions they can really add up.

Other fees to query with your chosen merchant account provider are statement fees, charge back fees, close-out fees, minimum usage fees, annual fees and account keeping fees.

David P. Montana has been a recognized industry expert, business consultant and author in commercial collection agencies and other business services for thirty years. Read more valuable tools and resources, including negotiating tactics, and important red flags and pitfalls to avoid when considering merchant accounts.

Share and Enjoy:
  • Print
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • Blogplay

Related posts on loans for people with bad credit:

  1. Processing Credit Cards For Your Home based Or Online Business? Being able to accept cards for a home based business or an online business is very important to it's success. This is the reasin why everyone who is running, or wishes to run one of these sorts of businesses, has to get the best merchant account they can....
  2. Business Mortgage Loans : Does a Financial Business Review Make Sense for my Finances and Cash Flow? Business Aspects to Consider in a Financial Review If you are a business owner, your company is as important as your health. Because of this, it is also essential that you conduct a regular review with a reliable banker of your…...
  3. How To Get A Business Credit Card With Your Online Business Obtaining a credit card for the use of your online business is both feasible and smart. Most businesses with an internet presence ship at least some goods. If you do business on eBay or Alibris, then you will need to ship the items that you successfully sell....
  4. Why is Customer Loyalty Important to Your Business? Whether you own a mom and pop corner shop or a worldwide software consultancy, customer loyalty is very valuable to you. Customer loyalty can be loosely defined as the predisposition of any given customer to purchase your goods or services over comparable ones available in the marketplace. When speaking of...
  5. How to Get Business Bank Accounts for People with Bad Credit How to Get Business Bank Accounts for People with Bad Credit Circumstances are challenging, the economy is in a downward turn and people are having difficulties to get a business bank account for people with bad credit. None of this is…...

Tagged with: • • • • •

Filed under: credit cards

Like this post? Subscribe to my RSS feed and get loads more!