The Benefits of Getting a Merchant Account

Many new business owners understand that they need to accept credit cards if they hope to capitalize on the largest amount of customers. What they may not realize is that setting up merchant accounts does more than open up your business for accepting these other payment methods. In fact, merchant accounts can be a great way to build business credit, which can come in handy down the road when it comes time to expand. Furthermore, it offers you a greater level of security on these transactions and gives you extra peace of mind. Keeping that in mind, you need to be careful which company you chose to set up your merchant accounts through because like all other services not all are created equal.

Accept Credit Cards

The obvious reason for a business owner to set up merchant accounts is to accept credit cards. Credit cards offer a safer and more convenient way for people to pay for goods and many individuals simply do not pay any other way. This has made it difficult for small shops, but fortunately affordable merchant solutions have started to become more and more common. With these affordable merchant accounts, even the small mom and pop stores can start accepting credit cards without fear.

Beyond just allowing you to accept credit cards, the fact that these transactions go through your merchant account also helps to make it easier on your bookkeeper. Rather than have to sort through and enter each individual transaction, merchant providers include helpful accounting software that will allow you to simply transfer the information. This saves you time when you accept credit card payments and also money spent on sorting through the information.

Merchant Account

Build Business Credit

One distinct advantage that often gets ignored by those looking for merchant accounts is that this service can actually work to build your business credit. When a transaction goes through your merchant provider, you are actually getting paid before the money is actually transferred. This means that every dollar you make is initially counted like a loan. At the time the payment goes through, you are paying back the money that was deposited into your account, which keeps you in good standings. In other words, so long as you minimize the amount of charge backs to your merchant account, you will be effectively raising your business’s credit-worthiness.

Keeping Customers Happy

Accepting credit cards may seem like it is just a benefit to your bottom line, but it can also go a long way to keeping customers happy. Generally speaking, people understand the benefits of using a credit card and often earn points on their purchases. With this in mind, they look for places that accept credit cards and when they find a business that does not, they are reluctant to shop there. Even though they might shop with you in one instance, convenience is a major concern.

By giving your customers the ability to charge their purchases, you make it more likely that they will come back again. You also give them a piece of mind that, should something go wrong with the purchase, they are protected by their credit card company. In the end, it is this level of confidence that allows you to retain customers and continue your business.

Why Searching for the Lowest Credit Card Processing Rates is a Mistake

In sales training, new sales professionals are taught to stress the difference between price and value. Though one product might be less expensive, it can also be so much less useful that it is simply not worth the money you would be saving. As a business owner, you understand that quality is more important than quantity and that finding a good value is better than finding the best price.

When it comes to credit card processing, many business owners forget this reality and find that they have gotten themselves in trouble. More importantly, credit card processing can be tricky for the unwary business owner, because the price you see on the surface may not be what you actually end up paying. To better understand this, a business owner needs to consider the different fees associated with a merchant account.


The Different Credit Card Processing Fees

One prominent reason that low processing rates can be misleading is because there are so many fees associated with credit card processing.

Some of these fees include:

  • Monthly Service Fee – Every month a credit card processing company charges a fee for using its service.
  • Transaction Fee – Each transaction you make with a credit card incurs a transaction fee. This is one of the most important fees to pay attention to.
  • Batch Handler Fee – When information is submitted to the credit company in batches, many merchant service providers charge this fee. It is important to remember that not all companies do charge this fee.
  • Interchange Fee – This refers to a fee paid from the merchant account provider to your business bank account when money is exchanged.

For many companies, there are a variety of other fees to consider as well. It is important to remember that different companies may have different fees, so you should look for the business that gives you the most flexibility and the most competitive fees across the board. This makes it very important that you consider every option before assuming that a lower price on the surface makes for a better deal.

Getting the Right Balance

The real secret to credit card processing is finding the right balance in fees. Though you cannot hope to perfectly predict your sales each month, you can use software and prediction models to help establish general ideas of what to expect. For most business owners, a higher monthly service fee is not necessarily a bad agreement. After all, if you are making a large enough volume of credit card sales, you will probably be spending much more on the transaction fees. With this in mind, the initial price is not nearly as much of a concern as the transaction cost.

Finally, always remember that the real value of credit card processing expands beyond simply providing you with a method to accept cards. A good processing company will supply you with tools and resources to help track all of your sales. This can be used to improve your systems and ensure that you can get more efficient each month.