How Do I Get a Merchant Account?

A merchant account is the basis for accepting payment cards. In simplest terms, it’s a business arrangement between you (the merchant) and a credit card processor (also known as a merchant services provider or merchant account provider). The processor acts as an intermediary with

the credit card networks and issuing banks, handling the authorization of your transactions and depositing the proceeds into your bank account. The processor also provides you with the hardware and software required to accept credit cards. Consequently, choosing the right processor to handle your credit card processing needs is very important. Here are eight tips to get you started:

1. Be an educated consumer. Learn about merchant accounts and the fees involved. Go into the process with some basic information under your belt. There are plenty of articles on the Internet and elsewhere that you can read prior to talking with a merchant account provider.
2. Organize your documentation. Once you get to the application process, you’ll need to provide basic information about your business like how long you’ve been in operation, the types of goods and services you offer, your debt payment history and current outstanding debt. If you’re a new business with no financial history, the provider may ask about your own personal financial history. All of these factors influence the fees you will be charged. Being prepared to provide this information can help speed the application along.
3. Identify potential merchant services providers. You’ll probably want to talk with more than one provider during your search. Ask for referrals from fellow business owners or merchant associations. Check out those companies on the Internet to get a feel for how they do business and the services and rates they charge. If possible, narrow your list down to three or four — more than that could be confusing and counterproductive.
4. Compare, compare, compare. As you start talking with potential providers, be sure to take good notes and keep track of what they’re offering. This is your opportunity to ask detailed questions that are specific to your business, such as the type of merchant account(s) you will need, especially if your operation is diversified.
5. Discuss fee structures. Rate information is important, but should be considered in context with what you will receive in return. To determine the fee structure that best suits your needs, the provider needs to know all about your business, the merchandise or service that you offer, where you sell (traditional retail, online, MOTO, remote venues) and related information. Be upfront with your answers and listen to the rep’s feedback.
6. Get technical. If you have very specific requirements — say, for example, you’re interested in wireless credit card processing or your mobile workforce needs to be able to accept credit cards in the field — tell the rep. Likewise, if you have plans to expand your operation in the near future, bring them up so the rep can include them in the service proposal.
7. Be security conscious. We’ve all heard horror stories about credit card and identity fraud and how devastating it can be to small businesses in particular. Ask potential providers about PCI compliance and security-related services they offer (including their data breach security program) to ensure that you’ll be covered in a worst case scenario.
8. Review and sign. Once you’ve identified the merchant services provider that’s the best “fit”, make sure you review the contract in full (even the small print) and understand it before you sign on the bottom line.

Doing your due diligence before choosing a merchant account provider will help to ensure that your business relationship with them will be a productive and satisfying one.