Thinking about opening a Merchant Account? Here are some issues to consider

Is your business thinking about accepting credit and debit cards as payment from your customers? There are several issues that must be considered if you are going to open a new merchant account. Here we will discuss all that needs to be accounted for when accepting these types of payments. There are three major components that need to be considered when opening an account with a merchant processor, including rates, fees, and equipment.

The first determination when opening your account will be the type of equipment needed to process your payments. Every processor has different solutions available depending on how the payment is being processed. These include IVR or Interactive Voice Response, standard credit card terminal, short range wireless, and long range wireless terminals. Depending on how and where you interact with your customers will go a long way to determining what type of equipment you will be using. The most important question to answer is: Am I operating in a card present environment? Once you answer this question, it will go a long way in deciding what type of equipment you will need in your merchant account.

As soon as you decide what kind of credit card terminal you will be using, it will then become important to look at the other costs involved in accepting credit and debit card transactions. These other costs include rates on the transactions, as well as any additional fees that most merchant processors charge. When you are looking at opening or switching your merchant account, these rates and fees can vary between processing companies. MasterCard and Visa are the credit cards that are accepted the most by merchants. Other cards that can be accepted include American Express and Discover. The rates that a merchant pays can depend on how the transaction is processed, and the type of card their customer presents to them. Since MasterCard and Visa are the majority of credit cards issued, we will discuss the rates that are charged by them for processing a transaction. Typically, any transaction can clear at one or two different rates. The processing industry has named these rates as "qualified" and "non-qualified." Every transaction run through a credit card terminal is processed at the qualified rate. Then there is a certain subset of the merchant's transactions that are assessed this additional non-qualified rate. Any time that your customer presents you with a "rewards" type of MasterCard or Visa, this additional non-qualified rate is assessed. A "rewards" type of credit card is any card that the customer received points, miles, or any other type of reward for using the particular card. These days, a majority of consumers are carrying these types of cards, so it is very important to focus on what non-qualified rates you will be paying on these transactions.

Another area that processors charge your merchant account is with a variety of fees. When opening or switching your merchant account, it is imperative that your processor detail all these additional fees as they can vary. These fees include settlement fees, push funds fees, monthly admin fees, minimum processing fees, and statement fees. Some of these fees only serve as additional profit for the merchant processor, so it is important to understand what fees you are going to be charged to your account.

The bottom line when opening or switching your merchant account is to view it with all the components, and not just focusing rates alone. Make sure that whomever you are calling puts all rates and fees in writing, and fully discloses all that is involved in processing credit and debit card payments. If the merchant processor you are talking with does not do this or tries to hide anything, it's best to try and find another processing company.