If you want to start accepting credit card payments from your customers getting a merchant account is fairly easy. However, getting a good merchant account is another matter. So I am writing this article for you business owners that have very little experience with merchant accounts and want the best account available to you.
Let me start by letting you know where I get my knowledge on this subject. I am a National Account Executive for a merchant account company. Many of my new clients have been in business for three to four years. When I first speak to them the first thing they do is send me their merchant account statement for me to review. My knowledge comes from these statements that are normally filled with exorbitant and hidden fees.
Here are five things to watch out for when shopping for and choosing a merchant account.
1. Watch out for credit card terminal leases - if you go this route it will help your short term cash flow but the terminal will end up costing you 400% - 600% more than if you just purchased the terminal. If you search the internet you should be able to find some great prices for terminals.
2. Watch out for proprietary terminals and payment gateways - these are products that only work with a certain merchant account provider. If you end up with one of these you will have to pay for a new terminal or change gateways when you change providers. The good names you want to see on your terminal are Hypercom, Verifone or Nurit and authorize.net, Plugnpay.com, Skipjack, etc. for your payment gateways.
3. Watch out for bucket pricing - typically if you the phrases qualified, mid-qualified and non-qualified are on your statement you are paying more than you need to for a merchant account. What you want is either “straight pass through” or “interchange plus” pricing. If you follow this advice you will be getting rid of any potential hidden fees and will be working with a better merchant account company. So DO NOT ignore this point, it is key!
4. Watch out for incredibly low rates - If you are promised a rate anywhere below 1.6325% + $.10, which is the base wholesale cost for a swiped Visa transaction, there is something going on that will not be a benefit to you. Most likely you are being “baited” with a super low rate and will end up paying much more resulting from hidden fees.
5. Watch out for early termination penalties - just like with cell phone companies, these penalties are very common in this industry. If you work hard you should be able to find a company that will provide a month to month agreement or one that only requires a thirty day cancellation notice. If you don’t cover this leaving a merchant account company could cost you thousands of dollars.
Hopefully this article will save you from learning about the merchant account industry he hard way and save you some considerable money.
About the Author
Robb Lejuwaan is a National Account Executive with US Merchant Services and is the author and editor of the merchant account blog, http://www.straightpassthrough.biz.
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