A Business Owner’s Mini-Guide to Choosing a Merchant Services Account

You’re looking for a merchant services account. The problem is: which one should you choose? They all sort of look the same at this point. Here’s what you need to know to get started.


What The Application Process Is Like

Every merchant services provider has its own application process. Most will require at least some documentation from you. Of course, if you check this merchant accounts comparison site, you’ll get a good idea of the basic services and requirements that every service provider requires.

But, understand that you may be asked for more or less documentation, depending on the type of business you run, what your transaction volume is like, and what your credit risk is to the bank.

You will be asked for your formal corporate documents, your proof of EIN, banking information, and an in-person interview. Sometimes, the issuing bank will do an over-the-phone interview.

This is part of what’s called the “underwriting process.” It’s used to help the merchant services provider determine whether you’re eligible for a merchant account and what fees to charge you.

Ask About Costs And Fees

Charges vary according to the type of business you run and the inherent risk of doing business with your customers. For example, a business that sells subscription services may be considered more risky than a business that sells coffee.

Subscription services are ongoing and may be for products or services with a hard-to-quantify value, a high cancellation rate, and a high chargeback rate. Low transaction amounts, like for gum or coffee, aren’t very risky. Most people don’t return packs of gum or cups of coffee.

The industry standard for direct pricing merchant accounts is the Interchange rate plus a per-transaction fee. On top of these fees, a monthly service fee may be charged.

If you decide to run your merchant account through a third-party provider, you may pay higher rates on every transaction completed, plus a per-transaction fee. However, these arrangements often don’t require you to pay a monthly fee or sign a contract.

They’re ideal for businesses with low transaction volume.

Ask About Cancellation Fees

It’s not uncommon for merchant account providers to charge cancellation fees, especially when there is a monthly fee, and low transaction fees. Ask about cancellation fees specifically because they’re not usually included in the list of ordinary fees.

How To Check Customer Service

Call customer service prior to signing up for a merchant account. Ask probing questions like direct line access to the security and fraud-prevention department. Ask to see a published company directory. How easy is it to get to talk to people you might need to talk to if you have a problem?

If a company hides its contact information, sends you through several tiers of customer support before you get to talk to the right department, or creates a lot of friction in the customer service department, it’s a sign that the provider doesn’t handle customer service requests very well.

How To Check Features

With more and more people paying for goods and services with their mobile devices, it’s not uncommon for customers to ask whether a merchant accepts ApplePay, Google Wallet, or other similar wireless payments.

If you don’t already have a credit card payment system set up, it’s worth it to look into NFC terminals so that you can accept wireless payments. Even though these terminals cost more than standard ones, this is where the future of cashless payments is headed.

Kai Goddard has been involved with a number of business startups and retail ventures. He likes to share his experiences and insights with an online audience and is a regular writer for a number of B2B websites.

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