Comparing Merchant Accounts

If you are new to business or have been operating a small business for a while now and accepting payment by only cash or check, now is the time to think about obtaining a merchant account. These allow you to accept electronic payments via credit or debit card.

Recent statistics published by the American Bankers Association show that the number of United States consumers who prefer paying with plastic over cash or check continues to grow. In fact, especially among younger consumers, checks are almost a thing of the past ñ with many consumers reporting that they rarely use their checkbooks, if they even have one.

Other Advantages

In addition to the convenience of accepting credit or debit card payments, having a merchant account offers additional advantages:

1. It allows you to tap into a new customer base, who would otherwise not purchase.

2. It provides instant confirmation of a sale, with no waiting for a check to clear and then having to deal with the residual outcome if it does not.

3. It gives your business an air of professionalism, raising your credentials in the eyes of potential customers. This is especially important for small businesses and sole-traders.

Types Of Accounts

Depending upon the nature of the business you own and/or operate, a storefront, mobile, home-based, online, etc, the type of account you will need is going to vary. A small business or mobile business will want to look at opening a mobile account, one that allows you to use your cell phone (smartphone) or other portable equipment to process the payment. Online businesses may need a wireless account, including the ability to handle mail order, while storefront operators may require a standard retail account. Other matters to consider include bad credit and risk factors. For instance, owners and/or operators of gambling and gaming establishments usually need to seek approval from an international or offshore provider as most domestic providers and banks will not work with this type of high-risk industry.

Comparing Providers

In addition to several types of merchant accounts being available, different providers offer various rates, fees and schedules. For instance, one provider may require four to five business days to process funds while another may provide a zero-day hold or next-day funding.

Things to look for when comparing account providers include:

1. Start-up fees.

2. Discount rates.

3. Monthly processing fees.

4. Annual fees.

5. Which credit cards are accepted.

6. Type of processing equipment and number provided.

7. Contract terms and duration.

8. Customer service.

9. Reputation.

Online research and a check at Better Business Bureau online can provide more information about a specific account provider.

Two Myths

While there is a wealth of good information regarding merchant accounts available online, there is also misinformation. Two myths you should be aware of are:

1. Processing credit card payments costs money. While some providers may offer low-cost set-up, having the service will cost you because it costs them.

2. While some providers can speed-up the approval process (for a higher fee), approval is seldom instant.

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