It's a fact that traders who are in a position to accept credit cards from their customers can expect to make more sales than those who only accept cash transactions. According to "Jumping Through the Merchant Account Hoops" by Khera Communications, the average credit card transaction is $40, compared to just $9 for cash sales. So, by not accepting credit cards you put yourself at a huge business disadvantage compared to your competition. It may also surprise you to learn that credit card transactions can cost your business less in transaction charges.
A case study by Coopers & Lybrand found that it costs, on average, 2.7% to process a credit card transaction as compared to 4.8% for cash and 4.0% for checks. The reason for this perhaps surprising statistic is that cash and cheques require more handling by financial institution staff whereas credit cards tend to be processed electronically for the most part these days.
To offer a credit card payment facility to your customers you need to set up a merchant account. Typically you will also need to have equipment installed to accept the payments. If you wish to accept credit cards online you will also need to sign up with a payment gateway such as CyberCash or VirtualNet to allow for instant authorizations over the Internet.
The provider of your business bank account should be your first port of call for a merchant account, but if you're looking to provide an online credit card payment service to your customers, it's important that you make sure that any merchant account provider can demonstrate a track record with accepting online payments.
Applying for and being accepted for a merchant account can take anything from a couple of days to a couple of weeks or more. Your chances of being approved relate directly to your already-existing business track record. That's why your own business bank is a good first option, because they know you and your business better than anyone else.
How much can you expect to pay? The cost of a merchant account can vary enormously mainly based on the perceived risk associated with the business applying for the facility and the area of business they are involved in. Typically you can expect start up costs to be in the $190 - $300 range with processing fees on individual transactions from around 2% variable depending on sales volume. The more business you're going to be putting through your merchant account, the more you'll be in a position to negotiate with your merchant account provider.
About the author:
Steve Jones is Website admin for http://www.merchant-account.no1-source.info which provides all the latest news and information sources on merchant accounts.
Tuesday, November 13, 2007
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2 comments:
Very good post about how to get a merchant account for your business. One point to note is that if you submit the card security code (the 3 digits on the back of the card) along with the number when you process the card, banks typically reduce their fee since having that code reduces the risk of fraud.
Raj Khera
Publisher, http://www.morebusiness.com
(Khera Communications, Inc.)
if you don't deal with a terribly high amount of credit card processing volume with your online business, a merchant account might not be the best option for your business. if your business is new and you haven't been able to judge your sales volume yet, it is reccomended that you start with a 3rd party processing site before opening a merchant account and being stuck in a contract full of features you are paying for, but don't need.
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