Whether you you do business from a store front (brick and mortar) or from an Internet website you’re going to need merchant services for credit card payments. Your merchant services account is a type of bank account that allows you to accept payments by debit or credit cards.
It’s an agreement between you as a retailer, your customer’s bank who issued him his card and a payment processor for the settlement of credit card or debit card transactions. Without a merchant account you cannot accept credit card and debit card payments from your customers.
Credit card processing services vary greatly in prices and services. Do your due diligence if you want the best deal and the one most suitable for your business. The list of service fees you could encounter are setup, gateway, transaction, statement, batch, minimum monthly processing, technical support, customer support, and termination or cancellation. However, Not all bankcard services charge all of these fees. Be sure to get a complete list.
Your type of business, volume, your merchant services agent program credit rating will have an influence on your fees. A given bankcard processing service may offer a low discount rate but charge more for one or more of the other fees. The low discount rates, below 1.5%, are reserved for high volume merchants with perfect credit. A nationwide department store will get a much lower rate than the little mom and pop operation.
Find out exactly what the card processor’s chargeback policy is, including arbitration procedure and the cost of a chargeback to you. Not all, but some charge you a fee if you have a chargeback. A customer disputes a charge, and bingo, you have a chargeback on your hands. He can do that for many of reasons including dissatisfaction with the product, price or service.
I had a chargeback for a $3.00 item. I didn’t think much about it until I got a $15.00 charge for having the chargeback. That really smarted.
Approach the “free” merchant accounts warily. Don’t believe them. There is no such thing. Those ads only mean that you won’t be charged a setup fee. However, the bank card services provider makes it up somewhere else such as gateway fees, or monthly fees.
Just as the old saying goes, “There ain’t no free lunch!”
Some merchant accounts require you to use their software for your shopping cart and the “Payment Gateway.” The “Payment Gateway” is the communication tool that enables bankcard processing service to authorize, settle and manage credit card payments over the Internet. It’s the link from your “buy” page (where customers input their card information) to the merchant account and the credit card organization, basically the same thing as a physical point of sale terminal in a retail store.
Check to see if you’re locked into using your merchant service provider’s shopping cart. Maybe there is an easy way to download a module to enable your own or a proprietary shopping cart. Often it’s less expensive to use your service provider’s cart rather than a proprietary shopping cart. Logistics for support may go smoother too.
Maybe you don’t need a shopping cart. You may get by with a virtual terminal. That’s a secure connection to the payment processors website where you can login and use your computer to accept credit card payments you’ve received by telephone or email. There’s no automation, and you’ll have to key in each transaction.
Before signing with anyone, you’ll want to know if you’re dealing with the actual payment processor or an Independent Sales Organization (ISO). An ISO is not the bank card payment service provider, and won’t be servicing your account after you’ve signed the agreement. You may prefer to deal directly with the service provider.
Finally, check to see what kind of customer service you’ll be receiving. Is it outsourced overseas, or will you be talking to someone in-house? Is it 24/7/365 or only during business hours and in what time zone? It’s better to know those answers before signing up rather then learning them while in the middle of a transaction.
OK, you’ve signed on with a service provider, how soon will you be able to start processing credit cards? Well, once your merchant account is approved, you should be able to accept that plastic upon receipt of your terminal (if you need one) and e-commerce password. Usually all within one business day of your account approval.