Credit Card Merchant Accounts

About Credit Card Merchant Accounts

These accounts utilize banks and third party processors to accept and process consumer credit cards, debit cards, and check cards. Accounts like these have been important for traditional businesses for a number of years but have become increasingly important for the growing number of e-commerce businesses.

Without a merchant account it is impossible to accept anything beyond cash or a check. This is more than a mere inconvenience for online businesses—especially those that provide fast shipping or instant services. It is also inconvenient for shoppers who are making purchases at physical locations. Many of today's shoppers carry do not carry cash and would prefer swiping a card to writing a check.

If you are interested in establishing a credit card merchant account you will need:

• A business license
• A business account at a recognized bank
• Proof that you have a legitimate business that provides a real product or service
• A tax ID or Social Security number

Getting Started

Your local bank will not be the only party involved in the credit card merchant accounts that you set up, but they are a good place to get started. In some cases, you can set up the account at your local bank. In other cases, the bank will direct you to a broker or a processing service.

The institution that will be processing your credit card payments will want to know about you and your business before they agree to do anything. Some of their considerations will include:

• Your credit. Having good credit will be important. If you do not have good credit, you may be required to pay a reserve.
• Your product or service. Some processors will not work with businesses that deal in cigars, pharmaceuticals, or adult products.
• Your sales figures. Processors will also be curious about the amount of business you do and how much you are selling your product or service for. Some processors have minimum sales requirements, while others will not do business with merchants who average more than $1 million per year in sales.
• Your refund policy. Some companies like Visa and MasterCard require processors to find out what your refund, service, or return policy is.

Once you have submitted an application for a merchant account it usually takes anywhere from 24 hours to two weeks for the set-up to be processed. Delays can sometimes occur if your application was not completed in full or if the bank has a large number of applications to review. International merchants and merchants who have high sales volumes may also experience a longer waiting period.

Related Fees

After signing up and getting approved for a merchant account, you will be subject to certain fees. The potential fees include:

• Set-Up Fees
• Monthly Access Fees
• Transaction Fees

Other merchant account fees may apply depending on:

• Whether or not you will be accepting payments online
• The number of payments you will be accepting
• The location of your business

You may also be required to purchase hardware or software to accept payments. Processing options range in price and can include:

• Swipe Terminals (best for retail locations)
• Real-Time PC Software Processing (best for mail order or Internet businesses)
• Virtual Terminals (best for telephone or Internet businesses)
• Touch Tone Processing (best for low volume businesses)

Credit Cards and Profit

Most business owners agree – and research supports the idea – that consumers paying with credit cards spend more money on purchases when using credit cards than they would if they were paying with cash or checks. Whether there is a psychological reason for not wanting to spend as much when plunking down dollar bills, or if the use of a credit card prompts splurging, accepting credit cards will more than likely increase your profit exponentially. For this reason, the various fees you will pay for your account will probably be worth it.

If you expect to deal with a relatively low volume of credit card purchases you may want to consider signing up for a merchant account through an online provider like PayPal. You can accept credit cards without the necessity of purchasing costly equipment. Using an account like this will allow you to accept credit cards at a low cost to your business while also giving you the ease of usage offered through an online service like PayPal. There are several other companies that offer online credit card merchant processing, and each company offers different accounts suitable for various businesses. Be sure to shop around before signing up with one particular processing company.