Some Important Tips To Compare Merchant Accounts And Improve Business Cash Flow

Merchant accounts are contracts between an acquiring bank that extends lines of credit to a merchant, and that allow businesses to accept payment for goods or services via credit cards.

It should be known that customers are much more likely to buy from businesses that accept credit cards. Statistics show that businesses with merchant accounts will see sales numbers increase immediately. According to statistics, the average cash sale is $9, while the average credit card sale is approximately $40.

Regardless of the type of business, the availability of merchant accounts will definitely improve your cash flow in several ways. Below are some benefits for using merchant accounts:

- Offering the option to pay with credit cards gives customers the chance to purchase on the spot.

- Merchant account processing fees are often lower than check transaction fees.

- Debt collection problems becomes an issue for the bank, not you.

While there are obvious benefits to having merchant account facilities in your business, there are also some drawbacks to consider.

- Its important that you protect your business from credit card fraud.

- You may need to revise your policies and procedures surrounding charge-backs and refunds to minimize damages.

- If you accept credit card payments via your website, be certain youre using fraud protection measures to minimize scams, thefts and fraudulent charges

Setting Up Merchant Accounts

Setting up a merchant account is often a relatively simple process. A company bank account will be needed for deposits from any credit card purchases. You\’ll need to also lease processing equipment and/or software in order to process transactions.

If you intend to process credit card payments online through your companys website, then youll need to take the extra step of registering with a payment gateway like VirtualNet or CyberCash. Always check that the merchant account software you have will be compatible with your online payment gateway.

Importance Of Comparing Merchant Accounts

Before calling your own bank to ask about merchant accounts, its a good idea to compare the offerings of several different banking institutions, as well as merchant account providers. Fees and charges can vary greatly, so its important to check what are the charges and fees likely per transaction.

For example, fees could include initial start-up costs, monthly lease fees for equipment, transaction fees…even sales volume costs and processing fees. Ask any potential provider for a written list of all the fees you\’ll be charged so you can compare them accurately with other vendors.

Merchant Account Fees and Charges

Many providers will charge some kind of application fee. It can vary from $0, all the way to $100 or more, depending on the lender.

You may also need to purchase your software, which can range in cost around $100, or more. Once this software is installed, its possible you may have to pay a licensing lease on the software, which can range from $20-$50/month. Again, this depends on your lender or merchant account provider.

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 you want to make sure you ask any potential merchant account vendor include charge back fees, statement fees, minimum usage fees, annual fees, account keeping fees and close out fees.

David P. Montana has been a prominent industry expert, business consultant and writer in commercial collection agencies and other business services for thirty years. Read more helpful tools and resources, including negotiating tactics, and important red flags and pitfalls to avoid when considering merchant accounts.

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