|November 11th, 2016|
Starting with a new merchant account is pretty intimidating. As there’s so much information out there, it becomes difficult to wade through all of it. Moreover, most of the people are pressed for time, which makes it tricky to weigh all the aspects. Deciding which type of account will prove beneficial, how to open it, the charges and most importantly, the security is not easy at all. However, with the vital details explained below, one can easily know all about these accounts and what all they should remember before, during and after getting a new merchant account.
Market nowadays is highly competitive for new merchants and thus, service providers leave no stone unturned to offer every assistance they can to get client business. Hence, using this prospect, business owners can get best quotes from different providers. As fees and processing rates are not fixed, things can be moved around and merchants can get the best services at the best price.
As a particular contract comes with new merchant accounts, it’s important to watch of the contract term as well as the cancellation fee. It is interesting to know that imposing a contract term helps in getting lower rates and fees. Couple of things to be careful about includes:
1. Term Auto-Renewal
There are some merchant accounts that have language in the contract, which is about renewing the contract term on its own if the owner does not cancel it within a certain time period. Remember, the cancellation period is about thirty day; however, every account is different.
2. No guarantee
Rates and fees will remain the same, there is no such guarantee. Good thing is that there’s nothing to worry, as the business person is notified through monthly statement.
It’s true that discount and transaction fees cover the major credit card processing expense, paying for the fees is still the need. Fees such as statement fees, monthly minimums and other important fees vary from one another. Hence, it is required to compare all the aspects.
Most of the people have misconception that credit card processing machines are way too expensive. Yes, this is true and terminals with thermal printers with additional features can be purchased at affordable rates. Though wireless terminals are bit expensive, that is quite reasonable with the right provider. Moreover, there are some providers who offer terminals with a new merchant account.
Merchant accounts have no hidden fees attached with them. Yes, this is true, as merchant account providers can’t charge anything that the client business has not agreed to in the merchant service agreement. When a new account is opened, two documents are provided to the client. First is the merchant service agreement and the second document is called the schedule of fees. Be sure that you receive and review both these documents very carefully before signing anything.
Declaring a monthly processing volume (gross credit card sales in a monthly period) and an average ticket (the average dollar value of a credit card sale) is needed while opening an account.
Both these figures are used by the underwriter to determine the degree of risk associated with the new account. If any of these figures exceed, the account may be frozen or closed.
Rate of charges depends on how the transactions are processed and types of card accepted. When a credit card transaction charges at a higher rate, it is described as being downgraded. Transactions downgrade due to two main reasons:
1. The way a transaction is processed
2. The type of card that’s processed
Types of credit cards that downgrade are:
1. Business or corporate cards
2. Government cards
3. Rewards credit cards
4. Foreign cards
Though nothing much is to limit these; however, downgrades that are a result of processing error can be limited. Two common processing errors behind downgrades are:
1. Failure in clearing the credit card batch regularly
2. Punching-in transactions on a card-present merchant account
Chargebacks occur when a customer (cardholder) contacts the issuer of their credit card in order to dispute a transaction. As a result, merchant who made the charge get a notice regarding the same. Business owners have to respond to the dispute in a given time frame because if they fail in doing so, the cardholder wins the dispute.
Besides being costly, chargebacks may also lead to termination of the particular account. Creating a chargeback prevention plan and follow it for every transaction is the best way to stay away from this troublesome experience.
There are many businesses in which credit card processing charges account for a major portion of monthly operating expenses. Hence, it is important to scrutinize the charges given in the processing statements. In case of any problem in understanding the statement, help of service provider could be taken.
So, this was a quick start guide for opening a new merchant account. With all the ins and outs related to merchant services, starting with a new account won’t create any problem for anyone. Enjoy the tremendous benefits of these account if you already have it; however, if you have not joined the competition yet, get set go and grab your account ASAP.