Your business won’t make it very far without the ability to accept credit card/debit card payments. And the only way you can do that is through a merchant account provider, which gives you the ability to conduct card transactions.
A merchant account is an account specifically meant for the purpose of processing credit card payments.
Basically, once you set up a merchant account, either through your bank or with an ISO/MSP, it allows you to accept credit card payments in your place of business.
Call it a lucky guess, but I’m going to assume that that is on your list of objectives. Where would businesses be these days without the ability to accept credit cards?
In the Dark Ages, that’s where.
You need to have a merchant account because without it, your customers are going to go to the guy next door for their goods and wares.
Unless you are a very unwise business owner (which you obviously are not because you are here reading this) you don’t want this to happen.
Listen closely and heed this advice and you won’t have to see your customer base running to your neighboring competition.
Whether you own a small “Mom and Pop” shop or restaurant or a large retailer, you will need a merchant account.
Talk to your bank to see what they have to offer your business. There are many banks and financial institutions to choose from so take your time deciding.
The world of payment processing is highly competitive, which is good on the one hand because it gives you a wide range of different price schemes.
They all want your business of course. And why wouldn’t they? They get paid every time your business conducts a transaction.
You would expect that it would be an easy process getting approved for a merchant account given that. Unfortunately, that most often isn’t the case.
Banks still need to do their due diligence and send your information through the proper channels to ensure that they are approving a legitimate business.
Not every bank charges the same rates or fees for their merchant account services, so it is important to check into your bank’s rates/fees to see what makes the most sense for your business.
Merchant account providers come in several forms. There are a lot of other financial institutions to choose from, not just banks.
These independent financial institutions add some additional competitiveness to the processing industry. They must be sponsored by a bank.
And even though they are sponsored by a bank, they have the ability to market their products independently to your business.
They must meet certain criteria to do so, of course. A good way to know if an independent sales organization (ISO) or member service provider (MSP) has met that criteria is by checking their marketing material or their website.
They are required to list the name of the sponsoring bank as well as the city and state where that bank resides and it must also state that they are “FDIC insured”.
If they don’t have this information clearly displayed on their website or marketing material, tread carefully! It’s a good bet that they are a business you don’t want to do business with. Be warned!
As far as pricing is concerned, your business will be charged per transaction based on the type and size of your business. Processing fees are different depending on what company is doing the processing.
Most fees include a flat rate per transaction and an additional percentage per transaction depending on the type of card being processed.
It’s a weird world in the credit card industry, but for a handful of reasons, credit card companies charge different fees for processing.
For example, if you usually accept Visa and Mastercard credit cards, you get charged less than you do for accepting American Express credit cards.
This difference in fees is not determined by the banks or ISO/MSPs. The credit card companies determine this.
There are a number of reasons behind this logic but one is that American Express is always processed as a credit card. Never as debit. The fees are just cheaper to process debit cards.
The reason for the fees is to protect against fraud. It’s kind of like insurance that everyone pays to do business. This way, the financial institutions can pay for fraudulent transactions instead of business owners, when and if it ever happens.
Through any good merchant account provider you’ll have the ability to accept all forms of payment, whether it’s Discover, Visa, American Express, Apple Pay, Google Wallet, all of which are now up to date with the world’s EMV standard.
So you need to be, too! If you’re not EMV compliant, then your business pays for any fraud done through a smart card.
All merchant account providers should be carrying up to date equipment and educating you on these standards.
If you are a small up-and-coming business, you should definitely do your due diligence and shop around until “the price is right!”
If you have any questions, give our super helpful RedFynn team a call at (888) 510-9871. We’re here to help you grow and improve your business!