As a new business owner, you may wonder how to collect payment from your customers online, through mobile devices, by phone, and in person. The task seems daunting until you learn about merchant accounts.
What Is a Merchant Account?
Merchant accounts are special business accounts which enable you to accept payment by credit and debit cards. They facilitate payments and hold the funds until they are sent to another account such as a business checking account. Merchant accounts are vital to all business owners. So, how does one open a merchant account? It actually involves just a few simple steps.
First, you need to decide which credit and debit cards you want to accept. Are Visa and MasterCard enough, or do you also want to accept American Express cards and perhaps some others? Another important part of step one is to decide what methods of payment you want to utilize, such as point-of-sale systems and mobile devices. Determining these two criteria position you to do a little research.
Once you’ve determined what types of payment you want to accept and how you wish to receive them, it’s time to do a little research into merchant accounts. Find companies with experience in your type of business. Also be sure any companies you consider offer 24/7 technical support because problems will inevitably arise.
What Types of Fees Do Merchant Account Companies Charge?
You’ll need to understand the fees of any companies you consider. There are two common types of fees for credit card transactions: a flat rate for each credit card payment that is processed or a percentage fee based on the total amount of each transaction. There are several other fees such as monthly minimum fees, statement fees, and early cancellation fees. Be certain you’re aware of all the fees any merchant account company employs before considering using their services.
The next step is to draw your credit report and resolve any negative issues. When you apply for a merchant account, they will consider your credit score because they take a financial risk if they handle your payments.
What Kind of Information Will I Need to Complete an Application?
Once your credit is good to go, it’s time to complete an application with one or two of the companies you’ve identified as being a good match to your needs. As part of your application, you may be required to show six months of processing transactions containing the following information:
- Volume and number of transactions.
- Volume and number of refunds.
- Volume and number of chargebacks.
The rest of the application will be simple information about you and your business, how you’re organized (corporation, sole proprietorship, etc.), when you were founded, your address, and other basic information.
Finding and hiring a merchant account company isn’t difficult. Once you identify what you need, consider fees, give your credit a checkup, and complete the application, you and your company will be on your way to a whole new level of success.