merchant account sales

Does your business need to accept credit cards?


If you have a small business or are contemplating opening one up, you seriously need to consider accepting credit cards. If your business is going to be through a web shop or portal, then you really have no choice but to accept them in some way.

It is a well established fact that people will spend more money if they can use a credit card than if they had to use cash or a check. With the development of debit cards tied to peoples checking accounts, many people don't carry a checkbook any longer and the risk of bad checks to the merchant makes taking checks a risky venture. The debit card is a win/win for both the merchant and the customer, but only if you have the facilities to accept credit cards.

Do you need someone to set up your services:

There are companies out there that, for a fee, will set up a merchant account for you. These companies have no incentive to get you the best deal, only to get themselves the highest payout. This is so easy to do yourself that it makes no sense to let someone else do it for you and your small business.

Merchant accounts:

In order to accept credit cards you need some sort of merchant account. Choices vary depending on the size and age of your business. Main line banks will typically not provide services to new startup businesses or web businesses. There are several merchant processors out there who cater to small business and web businesses. Unfortunately, they will take a large chunk of your sales for their fee, something referred to as the "discount rate". For a startup business or small web business it is not uncommon to see a rate of 3-5% plus a minimum. For example a merchant account provider might offer you a rate of 3.5% plus 30 cents per transaction. Many merchant providers who cater to small business also apply this rate to every transaction. It is important that you research your provider and insure you are only charged for sales. Otherwise you could be in a scenario like this. A customer buys something for $100.00. You pay the merchant account provider $3.80 using our previous example. Now the customer decides to return the product. They charge you another 3.80 for the refund transaction. In the end, you have not made a sale and have lost $7.60 on the deal. In addition, most of these processors will also charge you a monthly access fee ranging form $25.00 to $50.00.

What cards to accept:

It is essential to accept all the major credit cards. Not accepting American Express for your on line business is foolish. People who use American Express typically spend more than people who use other cards. However, many merchant card processors have variable rates for different cards. You may get approved for MasterCard and Visa but have to apply separately for Discover and American Express. Many times the discount rate for these cards is much higher than for MasterCard and Visa. It is not uncommon for American Express to charge discount rates in the 5% range. The answer is to find the most efficient and cost effective service available for your credit card processing needs.

In the last few years, two companies have offered credit card processing services to small and web based businesses at very good rates. PayPal offers several levels of credit card processing depending on your needs. While they are not officially a merchant account provider from your perspective as a small business owner there is no significant difference. They will let you take all credit cards with a discount rate that varies with your volume. Their rate is very competitive and probably as good as it gets for small business. They even offer a virtual terminal option that allows you to run credit cards on your computer just as if you had an expensive bank terminal at your business. For the typical small business or web business, especially if you sell on auction sites, PayPal is a great choice.

Just about every shopping cart is set up to work with PayPal In addition, they provide all sorts of easily used buttons you can paste on to your web site to purchase products. They also provide a simple shopping cart that you can implement on any web site. These two solutions are excellent if you only have a few products to sell.

A new player in this field is Google Checkout. Several major shopping carts are set up to work with Google Checkout. In addition, they provide simple shopping cart functionality for sites having few products.

This site does not offer nor is it legal advice. This site provides educational and helpful references and is designed for those two purposes only. Should you have any specific questions or concerns, contact a lawyer in your area.

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