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by Jay Lindsay
Copyright 2015, National
Business Reports, All Rights
would seem that getting a merchant account which allows your business to
accept credit cards would be a simple process as it should and can
be if you know what traps to avoid.
For those just starting out in business and especially if you are operating
from your home, you should expect that it can be a very intimidating
process. The good news is that by reading this report you will be receive
some very valuable information that will inform you of how things operate
and how you can turn things around so that you win the game of "new merchant
If you are going to be in business you need to be able to accept credit cards,
no ifs, ands or buts about it. It has been solidly proven that customers
buy more when they have the option to pay using their credit card. In
fact, some customers may choose not to do business with you at all unless
you accept credit cards.
So, with that said, let's look at your options and there are only
(1) First, you can walk into your local bank and ask to speak with
someone about opening a credit card merchant account. This is perhaps your
best bet if you have a good working relationship with your bank . Most banks
can set you up to accept Visa® or MasterCard®
and can provide information about others cards you may choose to accept.
(2) The next choice is setting up your merchant account through what
I call a "Service Provider." This is a company who has contracted
with the credit card companies and thus allows them to assist merchants
in accepting the various credit cards.
Neither the bank nor the Service Provider will provide you the opportunity
to accept and process your credit card charges without an array of fees:
• Discount Rate - This is the fee for every charge made and normally
will range from about 2% to 6%. Example: If you are at a 3% discount
rate and accept a $100 charge your fee will be $3.00 for handling the matter
• Transaction Fees - For each transaction you make you will be charged
from about 20¢ or 30¢ for the right to use the network that approves
and accepts the charges. The monthly transaction fee is normally not
a concern unless you are processing thousands of charges.
• Monthly Fees - These will have many names and are basically a way
the providers up their profits. Most will attempt to charge you $10.00
a month or more to provide you with a monthly statement (listing your charges
and fees) which probably costs them not much more than a postage stamp and
a sheet of paper. Some will want to charge a program fee (up to $25
a month) supposedly to reprogram your terminal if required.
• Annual Fee - This is not one of my favorite fees and I consider
it just another way to put some extra bucks into someone's
pocket. This fee is relativley new and is basically a charge for
doing business with them. Expect that it may run from $30 to $100 a
• Application Fee - Yes, it costs a provider time and energy to review
your application, run a credit report on you and to get you set up and educated
as to how to process credit cards. Some reasonable fee for their time
is acceptable but I would never pay such a fee in advance without a guarantee
that it would be refunded if I was not accepted for merchant status for any
reason. And, I would stress that the fee must be reasonable
perhaps under $100.00
• The Big Traps - Certainly, as in every business transaction, you
want to carefully read any contract that you may be signing. I would
urge you to watch for three very important things when agreeing to accept
Please don't be alarmed. You now have the ammunition to negotiate with
the various merchant account providers as you search for the best deal for
your particular needs. Do remember that everything is negotiable and there
are other fish in the sea. You are not required to accept their first
offer. You can ask for their very best deal and don't be afraid to tell
them that you are not afraid to put them on hold while you shop other sources
of merchant services. Being polite yet firm, in the long run, can save you
bundles of money.
"So, what next?" you ask. Let me direct you to some sites that will
help you make your decisions:
Have A Merchant Account for Just $5.00 a Month - This company should
be seriously considered for those who are just starting a business and want
to keep their startup costs extremely low. Their discount rate may
seem a bit higher than others until you find that virtually all other charges
are included for the one fee. There is no need to purchase or lease
a processing terminal as all transactions can be processed using a push-button
Buy Credit Card Terminals - This organization offers a number of different
credit card processing terminals which are sold at reasonable rates.
This is where I bought my last processing terminal.
PayPal - This is a good option for those operating an Internet site.
You can qualify and be accepting payments on your site within 24 hours.
They also offer, at no additional charge, a shopping basket program.
As a final thought, be aware that you don't necessarily need to accept all
credit cards. Many merchants, especially new startup ventures, do fine
just accepting Visa® and MasterCard® and never
even contact the others like American Express® or
Discover®. You may wish to also investigate the companies
(PayPal is one) that allows you to accept and process individual or company
checks by phone.
Good luck to you.
National Business Reports • PO Box 99 • Spring
Branch, TX 78070
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