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6 questions you must ask before you pick a merchant account

By Anastasia Zoldak

To be competitive, a company must have a mobile and versatile platform to process sales. Opening a merchant account is an effective way to implement credit card processing. For efficient credit card processing, it needs to be done in real time and in multiple currencies, especially if a business is trying to make a profit from Internet sales. When shopping for a merchant account, it is important to ask questions about the service and costs when using the services.

Question #1: What is the cost?
During the selection process, make sure to ask each merchant account vendor this question. If a business does not, they will get serious sticker shock from all the hidden costs. Read each contract carefully. Some fees a merchant account vendor can charge include fees for the initial application and setup, a monthly fee, a per-transaction fee and a statement fee.

Some merchant accounts will charge a fee if your account reserves fall under a monthly minimum. Other fees include international money exchange fees, charge-back fees and the most hidden fee embedded in contracts -- a fee that charges businesses if they cancel a contract.

Question #2: How does the business apply for service?
Most merchant account companies that process credit cards are cost-effective. Most of these companies allow businesses to apply for service online. The application process is usually fast and simple. Today's new technologies allow for signatures by mouse and online paperwork.

By the way, if the merchant account doesn't offer signature by mouse technology, you many want to consider another company. The application process will also give you an idea of how fast the company will respond in day-to-day transactions. It's important for a business to ask the merchant account company how soon the equipment needed for credit card processing will be sent.

Question #3: How secure is the payment gateway?
This is vital because it directly affects a company's bottom line should someone steal credit card information from a business. Customers not confident in the safety of their information will go shopping somewhere else. Businesses must ask any merchant account vendor about their payment gateway security technologies and certifications. Secure Server (SSL) Certification is essential for a business conducting commerce on the Internet. Therefore, they must ask the merchant account vendor about their compatibility with SSL certifications.

Question #4: Are transactions approved in real time?
Cash flow is the life blood of any business. Having to wait days or weeks on a transaction made via a credit card or wire transaction is not an effective way of doing business. Businesses need to make sure they have a complete understanding of how credit card or wire transfer transactions are processed by the merchant account vendor.

Question #5: What currencies can we accept as payment?
Many businesses do not think of themselves as international companies, but the Internet has created a global economy, and any business doing e-commerce on the Internet should consider accepting customers internationally. Some merchant services companies charge additional monthly or per-transaction fees for this service. While other companies do not accept currency from certain countries, before choosing a merchant account vendor, make sure to ask them about their foreign currency policies.

Question #6: What kind of equipment do they provide?
The days of the mom-and-pop cash register are over. Most business people do not run a "cash-only" business, and if they do, they should at some point expect an IRS audit. Many people use debit cards and credit cards for their transactions. That is why it is important to have a virtual terminal that allows businesses to securely process credit card transactions. A virtual terminal can be used in a retail setting, at a trade show or in any customer transaction where money is not collected through a business e-commerce site. It is important of find out the type of virtual terminal and fees a merchant account vendor charges for these credit card processing services.

Merchant service account providers are an essential part of creating a profitable business model. If a business wants to take advantage of e-commerce and have a flexible way for customers to purchase good and services, they need a good credit card processing strategy.

Article by Anastasia Zoldak

Published: December 22, 2009

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