Bill and Sue have been dreaming of owning their own business for years and were finally able to save enough money, find the perfect location, and secure the support of their community. The hundreds of hours spent developing, debating, and planning are finally getting ready to pay off. After Bill and Sue proudly walk into their bank with a fresh business license to open their bank account and the accounts manager happily opens their bank account. Then he says “Of course you plan on being able to accept credit cards so let’s get your merchant account application completed.” Like every other part of starting their business they looked at each other and instinctively decided that they needed to understand; what is a merchant account? And How to know if you are getting a good deal on your merchant account to accept credit cards? So Bill and Sue decided to do a little research before jumping in.
Within minutes of looking online, they were both utterly confused…..
What is a merchant account?
Most people think that being able to accept credit cards should be as easy as setting up a new email and don’t understand that a merchant account is actually a type of business bank account or that it is subject to certain oversight and underwriting requirements. A merchant account provides access to the card brands communication system so that credit cards transactions can be validated, processed, and funded. Think of a merchant account like the internet. The internet is out there but in order to connect to it and use it, you need an internet service provider. In this case, it is a merchant services provider that connects you with a merchant account. A merchant account not only facilitates the processing and settlement of credit card transactions but also acts as a sort of daily short term loan. Even though Bill and Sue will receive the funds from their credit card transactions within 48 hours – the “Merchant Acquiring Bank” who deposits those funds will not actually receive payment from the “Card Issuing Bank” for up to 10 days.
Businesses, like Bill and Sue’s, can set up merchant accounts in a variety of ways. They can establish a merchant account with their depository bank, through a major payment processor, ISO (Independent Sales Organization), or MSP (Member Service Provider). As it turns out each and every one of these sources has the same base cost! The only difference is how much they mark it up, what kind of customer service they provide, the reliability of their network, and how knowledgeable or experienced they are in the payments industry.
How do you find a good merchant account provider?
Finding a good merchant account provider ensures your business a reliable network, dependable deposits, transparent reporting, and most of all prompt courteous service when you need it. Unfortunately finding a merchant account provider that you can count on for excellent service whenever you need it, good transparent credit card processing rates, and an organization that is as interested in the success of your business as you are is easier said than done.
The first step to finding a great merchant account provider:
Visit the ETA (Electronic Transactions Association) website and look up ETA – CPP (Certified Payment Professional) in your area. The ETA offers the industry’s only education and certification program and professionals who have made the effort to seek this certification are truly dedicated to the industry.
Secondly, check out the merchant account provider’s track record:
An excellent place to start is with the BBB. See if there are unanswered complaints or a poor overall rating. Any reputable merchant account provider will maintain an “A” rating with the BBB.
What about merchant account rates?
Ask them for their interchange-plus pricing. Do not allow for any merchant account provider who insists on using tiered rates. For instance, “Your qualified rate is 1.79%” as you will never truly know the cost of your processing. Also, make sure to ask them if there are any circumstances whatsoever that would cause your rates above interchange to change. If the answer is yes then move on. If the answer is no – ask them to put it in writing.
Don’t settle for your bank’s merchant account service.
Although it seems convenient to work with your bank their rates tend to be much higher. As a matter of fact, banks credit card processing rates are, on average, 1% more than stand alone service providers like Bankcard Brokers – that’s roughly 33% more than the industry average! They usually do not provide direct service and instead count on the 800 number provided by the actual processing (or acquiring) bank. Most banks have very high overhead combined with profit minimums and practice regular and scheduled rate adjustments.
How do you know if you are getting a good deal on your merchant account to accept credit cards?
This is where things can get confusing for most business owners. This is because it is not as easy as simply asking “Hi, what are your rates?”. Once they open the doors to their new business Bill and Sue will soon find that there are merchant account salesmen knocking on their doors a few times each and every week! Every single one of them will promise the same exact thing – “How would you like to save money on your merchant account?” How is this possible? Since all merchant account providers have the exact same bottom line, they have come up with some creative billing methods to make their service seem cheaper than the competition. You can learn more about billing methods and understanding if you are getting a good deal in our blog on Understanding the Cost of Your Merchant Account
After a lot of searching Bill and Sue were prepared to start shopping. Armed with great information Bill and Sue called multiple merchant account providers and discovered that they seemed to know more than most of the agents they spoke with! That’s when they discovered Bankcard Brokers whose friendly, educated, and professional staff took the time to truly understand the needs of their business and provided fixed interchange-plus pricing that was a lot more affordable than their bank’s rates.
Bankcard Brokers believes in transparency, service, and credibility which is why we always consult our clients to insist upon Interchange Plus pricing and ensuring that your representative is an ETA – Certified Payment Professional. Without those two factors, you never know what you are paying or that you are working with an organization dedicated to ethical, professional, and dependable service levels. If you would like more information, or would like an honest hassle-free merchant consultation, give one of Bankcard Brokers’ ETA-CPPs a call or send us a Quote Request. If you would rather just APPLY NOW for guaranteed low rates, exceptional service, and a merchant account provider you can depend on simply visit our Apply Now page and pick the application type that best fits your business!