Important Merchant Account Comparisons And How They Affect Business Cash Flow
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Merchant accounts allow businesses to accept payment for goods or services via credit cards. They are contracts between an acquiring bank who extends a line of credit to the merchant.
Did you know that customers are more likely to purchase from businesses that offer credit card facilities? Statistics show that businesses using merchant accounts can see an immediate increase in the number of sales. These statistics are based on the average cash sale being only $9, while the average credit card sale is approximately $40.
No matter the type of business, the availability of merchant accounts will improve your cash flow in a number of ways. Here are some benefits for using merchant accounts:
- Having credit card facilities means you can offer customers the option to purchase on the spot.
- Merchant account processing fees are frequently lower than check transaction fees.
- Issues about debt collection will become the bank's problem, not yours.
There are obvious and clear benefits to having merchant account facilities in your business. There are also drawbacks that should be examined as well.
- You will need to protect your business against instances of credit card fraud.
- Your policies about charge-backs and refunds may need revising in order to minimize damages.
- If you accept credit cards on your website, make sure you're using fraud protection measures to minimize fraud, theft and scams.
Instituting Merchant Accounts
Setting up a merchant account is a relatively simple process. You will need a company bank account for any credit card purchases to be deposited into. You'll also need to lease processing equipment and/or software to process transactions.
If you're going to be processing credit cards through your company's website, you'll need to register with a payment gateway like CyberCash or VirtualNet. Make sure that the merchant account software you'll be using is compatible with your online payment gateway.
Importance Of Comparing Merchant Accounts
Before you call your bank to get a merchant account, take the time to compare the options and offerings of several different banking institutions, in addition to merchant account providers. Fees and charges often vary greatly, so its very important to check what you'll be charged and what fees are likely for each transaction.
An example of fees could include initial start -up costs, monthly equipment lease fees, transaction fees, processing fees and even sales volume costs. Ask your merchant account provider to supply you with a written list of all fees so you can compare with other lenders accurately.
Important Merchant Account Fees and Charges
Most providers will charge some form of application fee. This can vary from $0 up to $100 and sometimes more depending on your lender.
You may need to pay for your software, which can have an initial cost around $100 or more. Once installed, you may have to pay a monthly licensing lease, which can vary from $20-$50 a month. This, too, will vary and depend on your lender.
On top of these, you will incur transaction fees that range between $0.20-$0.50 per transaction. While these don't sound high, if you process a lot of transactions they can really add up.
Other fees to ask about with any potential merchant account provider are charge back fees, minimum usage fees, statement fees, annual fees, close-out fees and account keeping fees.
Article Source: Articlelogy.com
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