Choosing a merchant account provider

Choosing a Merchant Account Provider
Merchant account providers are not created equal; there are many different types so it is necessary to identify your needs to find the most suitable for your business.

What are your needs?
Do you want to batch (manual) payment process or real-time payment process?

Manual processing requires an order to be received with the credit card number through a phone call, fax, or online form. The order is then processed manually either by contacting the payment processing company (through a web based or dial-up connection) to verify the credit card number or by using a point-of-sale terminal to swipe the card.

In contrast, real-time payment processing means the credit card is automatically processed when the customer submits an order. When the credit card is verified and approved, the customer receives immediate notification that the order is accepted and the funds are transferred from the customer’s bank account to the merchant’s account.

When choosing batch or real-time processing, consider the number of transactions that occur on your storefront. If you expect low volume sales then manual processing is a viable route. It is not only less costly than real-time processing but it also protects against fraud, as you have more control over the processing procedure. The disadvantage is the time it takes to manually process orders. Real-time processing is better for large volume sales and for products that are sent electronically.

Examining your Business

Margins : The margins of the products and services you sell will determine the transaction fees you can afford to pay. For instance, if your products are inexpensive and sold in high volumes, then it is beneficial to choose a provider that offers low transaction fees, which usually range between $0.20 and $0.70.

Transactions Per Month : Some banks require a minimum number of transactions per month. If you do not meet this minimum, you could be required to pay additional fees. Some banks will ask you to estimate the number of transactions you expect on your site. If you are a new business, it is better to estimate low and exceed your expectations compared to guessing high.

Internal Resources : Your internal resources will influence the type of services you need from your provider. For instance, if you lack technical resources, then it would benefit you to select a merchant account provider that focuses on customer service and is willing to work closely with you.

Evaluate Your Businesses Hardware, Software And Service Requirements

Integrated Systems: When you choose to take your business online, selecting a merchant account provider is only one of several considerations. It is suggested you first find a shopping cart solution that fits your needs, and then you should find a merchant account that integrates with your storefront (not the other way around). You also need a payment system to process transactions, and a payment gateway to securely process payments. A number of merchant account providers offer integrated systems (turn-key solutions) that include each of these components, as do E-commerce solution providers. Many will bundle merchant accounts and other e-commerce services into their packages. Working with a merchant account provider that offers integrated services means that each level of the transaction is compatible with the other, meaning fewer headaches for you.

If the merchant account provider does not offer integrated services, it is important to ask what software it requires and the cost of the software. Often times, a merchant account company will offer low cost merchant accounts and then charge extra on the software they sell you on the back-end. While a good merchant account provider will tell you what software is compatible, you will benefit more if you do your homework and ask the right questions.