If you are the owner of a growing business, you probably want to start accepting credit and debit cards as a form of payment. In order to do this, you will first need to open a merchant account. Lucky for you, we have created this blog post to teach you 4 important things you need to know before applying for a merchant account to make the process go as smoothly as possible. First, let’s go back to the basics and explain exactly what a merchant account is.
What is a Merchant Account?
A merchant account is a type of bank account that allows businesses to accept credit and debit cards as a form of payment. Opening a merchant account is beneficial to your business because your customer will have the option to make purchases using their preferred payment type, and you will be able to make more sales by accepting a wider range of payment methods.
Before you open a merchant account make sure you…
1. Know what credit card types you want to accept at your business.
Visa and MasterCard are the two standard big-name credit cards that nearly all businesses will accept. You might want to consider accepting American Express and Discover as well. Even though these cards come with increased rates, your customers will expect you to accept these card types and doing so will allow them to pay the way they want to.
2. Understand the associated fees.
Knowing exactly how much you will be paying is crucial before opening a merchant account. The structure of credit card processing fees will vary from processor to processor. This ranges from a flat rate to a percentage and can even vary on the specific card type. In addition, there may also be minimum monthly fees, cancellation fees and chargeback fees. All of these can add up quickly, so you want to be sure that you have done your research and know exactly what you will be paying.
3. Find a payment option(s) that is best suited for your business.
Nowadays, businesses have the option of accepting payments via a variety of different methods. These include, in person through a POS system, using a countertop terminal or mobile swiper, online through a website or even over the phone through a virtual terminal. Make sure that the payment service provider you are evaluating offers your preferred payment method(s).
4. Determine whether your business is low-risk or high-risk
Depending on your business type, the difficulty of obtaining a merchant account may vary. In the realm of merchant services, certain business types are considered to be high-risk or low-risk. Low-risk businesses include restaurants and most retailers. High-risk businesses are those that operate in a high-risk industry such as herbal supplements, weaponry, pawn shops and others. For a lowrisk business, it’s typically much easier to open an account. If your business is high-risk, it’s important that you do your research and find a merchant services provider that specializes in high-risk business to increase your chances of being approved and ensure that you are getting the best pricing.
All in all, there is a lot to know and consider before applying for a merchant account. Not all merchant services providers are created equal, so you want to be sure that you are doing your research so that you can get the best services and pricing. This will ultimately allow you to satisfy your customers and keep your business’ operations running smoothly!