How does a Merchant Services Account Work?

In today's fast paced business world, your ability to accept and process credit cards can make or break your company. No matter if you are an internet based company, a brick and mortar business or both, you will lose business if you don't accept credit cards. If you are ready to learn a bit more about the process of accepting and processing credit cards, or merchant services, read on.

When you open a merchant services account, you will be able to accept credit cards. You can open them online or offline and choose a number of different options depending on your business needs. Most small businesses set up merchant services accounts through credit card processing companies or through recommendations from their banks. There are many credit card processing companies out there on the market and all have different fees, set-ups and selections on what they offer. It is highly recommended you do some independent research before choosing one. For instance, if you have a small business that only operates online, you may need a different type of account than a small business that has no website at all.

There are some negatives to opening a merchant services account, but most people believe that the positives outweigh these negatives. Doing research can seem overwhelming, but it must be done. You will also need to apply for an account which can depend on your credit rating both personally and professionally within your company. In addition to credit rating, merchant services accounts will take charge backs into consideration. Charge backs are related to customers who dispute charges from companies on their credit card statements. Usually these are customers who claim the company charged their card without permission or the charge was false. Too many of these charge backs and the account will be dropped. Typically, as a new customer, this is assessed by your industry, the amount of time you have been in business, and if you have a brick and mortar building, they may take the lease length into consideration and even references and reviews from the public. As overwhelming as that is, it is necessary and every company has to go through it. In almost all cases, it will be worth the pressure in the end when you see your increased sales and profits.

The final thing you should understand about merchant services accounts is that some of them have a limit. For instance, when you set up your account, you may choose to have a small business account that has a $5,000 limit per month, meaning your merchant account can accept up to $5,000 in credit card transactions. For most of the year, that could be perfect, but what about during the holidays? Many merchants expect sales to go up in December and it is certainly possible you could go over that $5,000. If you do, your credit card processing service may just cut you off, meaning they will stop accepting payments. They can also opt to keep accepting them, but hold the money until a set amount of time passes, typically a month. Make sure you ask about this and any other questions you may have before opening your merchant services account.