Getting A New Merchant Account
Do you need a new merchant account? If you’re a small business and you’re in the market for a new merchant account, there are – naturally – several factors to consider before taking the plunge. Begin contrasting new merchant accounts by comparison shopping online.
Additionally, by comparing, you may realize that your bank is charging much more than you should be paying – a very common occurrence with local banks; you can avoid this issue by researching your new merchant account options online.
When you’re researching and selecting a new merchant account, consider: the discount rate, per-transaction fees, bank statements, monthly minimums, contract length, and cancellation fees.
The discount rate and per transaction fees are often among the most important factors in choosing a new merchant account. The discount rate is the percentage of each of your sales that the bank will deduct – generally around 2%. A per-transaction fee is an additional fee per transaction ranging from ten cents up to a dollar. Take this into account when you choose a new merchant account for your business.
Your new merchant account’s bank statement is simply a printout of your monthly business activity, and typically shouldn’t cost more than about $15.
Many payment-processing companies require a monthly minimum of sales transactions, typically about $25, so your business must process at least $25 worth of associated fees. If you process about a thousand dollars a month, this shouldn’t be a problem. Remember that good customer support is equally crucial as decent rates. What you save in initial low fees with your new merchant account, you will end up paying for it in another way.
Many payment processors – especially banks – require a three-year contract. The longer the contract, the lower the fees should be, so if you want a long-term contract for your new merchant account, then negotiate with them. But never forget the cancellation fee: typically the sum of the remaining months multiplied by the monthly minimum.
Consider the last – but not least – important factor in choosing a new merchant account. All processors must deal with rates charged by all the major credit card providers – called an interchange rate. This is a fee that your new merchant account’s bank or processor must pay and, as such, they will pass along this cost to you in your new merchant account.