How to Get a Merchant Account
So you want to get your business a merchant account. This is an account that allows you to receive payments via credit cards and debit cards. You can get your very own account in two ways, both of which involve accepting the terms of a legally binding agreement.
- You can apply for a merchant account with any bank that has a relationship with Visa or Mastercard and is a member of a processing agreement with these issuers.
- Enter into a dealer account agreement with any member company that has a relationship with these banks, but is not a bank themselves.
The terms of the agreement come in statement form, agreeing to the terms and conditions of credit card issuers when processing and sending payments. So what are the four steps to starting a merchant account?
1. Figure out how your business wants to work with card payments
You have to ask yourself the all-important question – to what extent do you want your business to work with card payments? Do you want to accept payments with both Visa and Mastercard? Do you also want your business to be open to payments made with American Express and other brands of cards? Prepare a list, if you can, of all the different credit and debit cards you want to do business with.
After this, you have to think about how the payments to your business will be made. The traditional point of sales system is fine for most conventional stores. However, some people will make their payments using a card reader on a mobile phone, while others will use an online payment gateway to make their payments. Each of these has its perks and drawbacks, so consider each carefully before you make a decision.
2. Check out the different providers of merchant accounts
There are many service providers out there who would be more than happy to let you open a merchant account with them. However, you have to think about your needs as well. Since you have decided on how you want to use your new merchant account, start thinking about the different providers based on what they offer, including:
- Transaction fees – some merchant account providers charge a flat fixed rate for each payment regardless of the cost of the purchase the customer makes. Others charge a percentage of the price paid, which is a little more complicated to deal with, although it might be the most profitable option for you.
- Other fees – Some merchant account providers might charge you extra fees for value added services, cancellations, changes to the contract and more. Check out all of the fees and make your decision based on which provider will cost you the least while providing you the best service possible for your business.
- Software and setup of payment gateways – are these services offered by the provider, or do you have to pay extra for them?
- After sales support – How highly rated is the support provided by the vendor after you have opened your account with them?
3. Setting it up
Once you decide on a merchant provider (take your time with step 2!) the application is made, and upon approval, the new account is set up. The application review process is pretty tiring because it is so in-depth. All your business finances and plans will be analyzed to ensure that you are a legitimate company. Your credit rating will be checked, among other things. At the end of this, the account will be set up.
4. Start getting paid!
At the end of this ordeal is the light at the end of the tunnel. You can now start accepting payments from your customers using their credit and debit cards. It will make you far more desirable to the general shopping public and will help your business reach the next level concerning efficiency and appeal.
Setting up a merchant account can seem overwhelming at first, but pays off when done right. Take your time and throughly examine any documents before agreeing to anything binding!