How to Choose a Merchant Processor
by: Ezra Gabay
As a merchant you want, one of your many goals is to provide your customers with as many opportunities to pay you as possible. One of the most convenient ways for many customers to pay you is with their credit cards. For the customer it means added security because if there is a problem, they have the credit card company behind them. For you, the merchant, it means the funds are in your bank in 24 hours and there is no handling of cash. But who should you go to in order to set up your merchant account and what questions should you ask? There are some very important questions you should ask yourself and your prospective merchant processor before committing to one.
What are the benefits to my business for accepting credit cards?
This is not as simple a question as it seems. Many businesses just don't need to accept credit cards. Small food vendors or other small cash transaction based vendors are probably better off being cash only. Alternatively, service firms that do large invoices also may not need to accept credit cards because the transaction size is large and the volume is low. Merchants who do a high volume of transactions, for example clothing stores, attractions, retailers, or restaurants are ideal candidates.
Transaction volume and size will generally increase because customers are comfortable spending on credit cards and are more likely to spend a little extra in order to purchase what they want. Most consumers have access to credit cards, as a result, you may find that you will attract more customers who would otherwise not spend cash with your business.
In addition to being able to accept credit card payments, there are some other benefits including increased fraud protection through payments like the Verified by Visa and MasterCode programs. You can also run gift card programs that use the same underlying technology as credit cards.
How to find a Merchant Processor?
There are two types of merchant processors, those who are ISOs (independent Sales Organizations) for the major banks like Chase/Paymentech or HSBC, and those who are agents who work with an ISO. Anyone can become an agent, generally speaking, but in order to become an ISO, a company must go through a lengthy and costly application process. When looking for a merchant processor, I recommend you look for one who is an ISO. You can usually find a merchant processor through your local Chamber of Commerce or Board of Trade. Alternatively, ask for a reference from a trusted source.
What should you ask when selecting a Merchant Processor?
Your relationship with your merchant processor is a very important one. Since your merchant processor will ultimately set your discount rates and be responsible (to some degree) for dispersing your funds, you will want to ensure that you know the company and its policies and procedures. Here are some good questions to ask when selecting a merchant processor:
1.Who is their primary bank? I recommend you choose one who is with Chase/Paymentech, by far the World leader and largest payment clearing house.
2.Who are some of their clients? Find out who some of their clients and partners are. You can usually tell whether there will be a fit if the merchant processor provides services for related businesses.
3.How long have they been in business. Although this is not always a good indicator, generally a well established company will be easier to work with in the long term.
4.What fees will be charged. This is an important question. You will want to know exactly how much each transaction is going to cost you so that you can find ways to recover the costs.
In summary, always do some due diligence when choosing a merchant processor. Be prepared to negotiate and ask questions.
About The Author:
Ezra Gabay
CreditCard Transactions, Inc. (CCT) is a merchant account processing company serving businesses nationwide. CCT currently handles the merchant accounts for over 15,000 merchant locations and processing in excess of 1.5 billion dollars annually. Our company provides payment processing services for Visa, MasterCard, Discover, American Express, Diners Club, JCB, ATM, debit cards, EBT state and government cards, electronic gift and loyalty cards, as well as a variety of private label and smart card technologies. CreditCard Transactions, Inc. and our Agents work with retail stores, restaurants, mail order & telephone order, e-commerce, internet, home-based, petroleum, supermarket, and lodging merchants. CCT caters to all avenues of commerce.
creditcardtrans.com
info@creditcardtrans.com
August 2006
Disclaimer: The information presented and opinions expressed in these articles are those of the authors and do not necessarily represent the views of BIZBUD.com and/or its partners.
Unless otherwise stated, the contents of this site are
Copyright © 2006 BIZBUD.com - All rights reserved.
Articles are copyright materials of their respective authors.
|
