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How to Find the Best Merchant Account Credit Card Processing Rates

Aug 17, 2007
Which would you prefer to do? Spend a bunch of money accepting credit cards through a great merchant account - or spend significantly less for a fantastic merchant account that boasts identical features and services?

Well, unless you have recently had a serious blow to the head, I am sure you would rather pay less for the identical features. Any sane person would agree.

Unfortunately, in the merchant industry, it is not always as easy as comparing "A" to "B". There are a plethora of diverse billing structures, charges, and fees that make it very difficult to understand just how one service stands up to another.

So why don't we see how to find, compare and choose the ideal merchant account for your unique small business...

To start with, you have to locate a minimum of 3 separate financial institutions - these could include a bank or credit union who can sign you up for their merchant account. Also, you should locate different merchant providers by utilizing Internet search tools that provide particular benefits. There is a standard approval procedure that both the banks and the merchant services use. The following information will be required in order to process your application:

1. A business plan that is feasible,

2. A credit history free of significant blemishes, and

3. Proof that you are able to pay (and have to ability to continue to pay) the charges related to a merchant account.

It of great benefit to you to research the ins and outs of the fee structure charged by each of your potential merchant services companies and/or banks that supply merchant accounts. There are many providers who fail to fully disclose their terms and conditions until you actually sign up for the account - so you might need to ask them for a copy of their "T&C". This way you are able to understand just how much it will truly set you back to use that account. In any case, make certain that you totally comprehend the terms and conditions before going with that company.

Things to look out for are:

1. Charges to cancel (how much, details, contract duration)

2. "Variable" or Introductory Discount Rates - the discount rate is the largest component in deciding just how much the true charge will be to accept credit cards. Make certain that the rate is single, locked-in, and non-changing. If it's on a sliding scale, or can be altered without notice - run, don't walk...

3. Free Equipment Offers - their return policies on the equipment are the most important to find out in this respect - for example, if the equipment is "damaged" at all, many times you are liable to substitute it at full market value - this can be extremely costly....

Now that you have that rudimentary information, to get the best possible credit card processing rates shop many different companies. The options are plentiful, and pricing plans and incentives are available for setting up a merchant account - each one highlights a specific facility. Finding out which one suits you the best is to your advantage. Some companies waive the installation fee, but others have a one-time overall fee and throw in other facilities at no charge. Each provider charges a discount rate, ranging from 1% - 5% and up, based on the type of account. A transaction fee, ranging from $0.05 to $0.25, is generally included.

If you want to get the best deal on credit card processing rates, you will have to do your homework well. Thoroughly search for the best priced terms and conditions - but make certain the company has a good reputation. You certainly don't want to get stuck with a company that is lacking in the customer service department, particularly when your money is on the line!

Things to consider when looking for a good merchant services company include your average number of transactions per month, your profit margin, your average order size, and number of times you will be taking credit cards from your customers. Obviously, retailers with a lot of volume will focus on lowering their discount rates and per-transaction fees as much as possible more so than their monthly fees. Conversely, small and micro-businesses with a bigger order size, but smaller transaction volume are able to be a bit more flexible with the discount rate and transaction fees. They turn their focus primarily on lowering monthly/minimum fees.

In any case, discuss the subject with your peers in your industry and contrast their opinions with the research into your prospective merchant providers that you have done on your own. Taking credit cards should be a good money making choice if you decide to use the right service.

Just be sure you double-check all those terms and conditions!
About the Author
Chris Rempel, marketing director of Accept by Phone, just launched a "Lens" on Squidoo.com that lists the most affordable merchant account services available for small businesses...

Check it out: The Best Small Business Credit Card Processing Services
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