| Are you confused by the array of merchant service | | | | ask about other service fees that may be added on |
| providers offering to process your business' credit | | | | every month, such as a statement fee, cost to |
| cards? That's understandable; it's a very competitive | | | | process transactions with a hand held wireless terminal |
| business these days! This article will help to familiarize | | | | if you have one, annual fees, etc. The account |
| you with some of the industry terminology and | | | | executive should sit down with you at the time you |
| practices and help you better evaluate which | | | | apply and go over each and every fee you will be |
| company may be the right fit for your business model. | | | | paying. |
| If you operate a small business based out of your | | | | Don't think of these fees as necessarily being |
| home, or do mail order or sales via the Internet, there | | | | unwarranted, unfair or a rip-off. Accepting credit cards |
| are some things to be aware of and questions you will | | | | has really become a necessity in today's increasingly |
| want to ask. | | | | cashless society and your costs for doing so are |
| First be aware that many banks will not provide a | | | | something you just have to factor in to your cost of |
| merchant account to a home-based business or even | | | | doing business and the prices you charge your |
| a start-up business. Second, if you are not selling a | | | | customers. |
| product or service directly face-to-face to your | | | | Be comforted as well that the fee and rate schedule |
| customer, banks are wary, because by paying you | | | | you start off with is something that can be |
| today for a product or service the customer has not | | | | renegotiated down the road when you have |
| yet received, they are essentially extending you a line | | | | established more of a track record with your |
| of credit and if you do not fulfill the sale there will be a | | | | processor. |
| chargeback and they will want to know that there is | | | | Another issue to visit is the cost of any equipment you |
| money in your business checking account for them to | | | | will need to process cards. Will you have customers |
| access and debit back. Otherwise, they still will have to | | | | present with you, handing you their card? If so, you will |
| issue a refund to the dissatisfied customer but will be | | | | need either a credit terminal or a credit card swipe |
| unable to recoup those funds from you, the merchant. | | | | block connected to your PC so you can run the sales |
| If you are running a website and taking sales online, | | | | through a "virtual terminal". If your sales are going to be |
| you will want to have set up a secure shopping cart | | | | done remotely by phone or mail, you will not need a |
| for your customers. There are a number of shopping | | | | terminal, just the ability to have that Virtual Terminal on |
| cart software packages out there so you want to be | | | | your PC. If your business is strictly Internet-based all |
| sure that the package you choose is going to be | | | | you will need is shopping cart software for your |
| compatible with your credit card processor's "payment | | | | website and most processors sell that and will set it up |
| gateway." Usually the best way to ensure this is to | | | | for you. |
| purchase your shopping cart software directly from | | | | If you can afford to but your equipment outright, do so. |
| your credit card processor. That way they will usually | | | | Leases are usually for 48 months and non-cancellable |
| assist you in setting up the software to function | | | | and in the end you spend a lot more money to acquire |
| properly, saving you the additional expense of hiring an | | | | your equipment, although these lease payments are |
| outside web programmer to do the installation. | | | | tax deductible. |
| Transaction rates and fees | | | | An advantage to using a PC virtual terminal is that the |
| There are a lot of factors your processor will use to | | | | transactions are all stored and can be downloaded in |
| determine the rates you are charged to accept and | | | | formats for your particular accounting software. |
| process credit cards. There is not a set rate they | | | | Additionally, you can set up recurring transactions, such |
| offer to everyone. They are going to look at what | | | | as monthly membership payments, to occur |
| type of business you are in - certain business | | | | automatically, or if a customer does repeat business, |
| categories are considered "high risk" such as | | | | pull them up and run their card for them without again |
| telemarketing, adult, overseas, etc. How long you have | | | | having to ask them for that information. |
| been in business. If you ever had a merchant account | | | | Be sure to ask your processor when you will have |
| before, did that relationship end satisfactorily or were | | | | funds available. 24 to 72 hours is normal, usually the |
| you terminated? How much of your sales are not | | | | longer waiting period is for start-up businesses, |
| face-to-face: mail, telephone and Internet. What is the | | | | non-face-to-face transactions or less than perfect |
| average dollar sales ticket, what is your monthly sales | | | | personal credit ratings. Some processors will even |
| volume. And your personal credit rating. | | | | require you to have your business checking account at |
| Rates can range from about 1.5% up to 3% depending | | | | their bank. All processors will require that they have |
| upon the processor's assessment of their risk in | | | | 2-way access to credit and debit from your account. |
| extending you a merchant account. Be sure to also | | | | |