Tuesday, April 14th, 2020
A merchant account is key to credit card payment processing for any company looking to level up in the competitive microbusiness landscape.
It is the account that receives and holds, temporarily, all the funds (all card payments) from the point of sale or virtual terminal. The funds collected in a merchant account are later transferred to a business bank account.
Though a merchant account is the most convenient way to process credit card payments, a merchant still has other options. For instance, a retailer could use a third-party payment processor.
Why Merchant Accounts Matter
The critical role of a merchant account is to smooth the complex dealings that occur between a business owner, its customers, card networks, and the payment processor. This never-ending process happens every time a merchant initiates a card transaction.
Because taking card payments is risky business, a merchant account makes sure you receive finances in the shortest time possible while protecting banks from losses and safeguarding customers from scams.
In essence, this approach ensures everyone stays accountable in line with the stipulations of the credit card processing contract.
Steer Clear of Rip-off Merchant Account Offers
You’ll most definitely pay certain fees if you are going to enjoy merchant account services and process payments.
But not all merchant account offers are as good as they seem. And because you don’t want to put your business in jeopardy, here are some tricks to avoid devious merchant service offers.
- Watch out for marketing ploys
Many service providers want to boast the lowest rates in the industry, even if it means deceiving retailers. While quotes may seem low at a glance, the rip-off is often in the hidden fees.
Merchants can avoid being victims in three ways (1) by getting up to speed with merchant account fee structures, (2) reading contracts thoroughly, and (3) watching out for seemingly perfect deals.
- Insist on an interchange-plus plan
This plan is ideal for a merchant because it allows you to see the profit margins, besides revealing the obvious like the interchange rate for every transaction.
Because the interchange rate fluctuates from one transaction to the next, this approach is the best way to view the markup for the credit card processing firm.
Avoid fixed plans that make it tricky to judge one service provider’s offers over another.
- Look out for Premature Termination Fees
Many merchants have complained about early cancellation fees, so you want to study all contracts thoroughly. Go word by word as these fees could be hidden within the agreement document
Many service providers charge hefty early termination fees in thousand dollar bills, which is not a good idea, especially when you want to make a switch.
Be slow, but sure: don’t succumb to pressure!
Lastly, you want to take as much time going through all offers in detail. Don’t succumb to pressure from a sales agent. Take your time because your decisions today will impact your tomorrow.