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How To Set Up A Merchant Account
 One of the early decisions you will make as a new business owner is the matter of whether or not to accept credit and/or debit cards.
Business accounts that allow you to accept credit or debit cards are called merchant accounts. If you don't accept credit cards, then your only other option is to accept checks, cash, or money orders.
There are plenty of reasons to accept credit cards. Statistics show consumers are more likely to buy if they can charge the purchase and they will buy more when able to use a credit card for payment.
Debit cards work like credit cards from the viewpoint of the customer. One of their biggest advantages is the fact that your business will get instant access to the money.
Accepting credit cards encourages people to buy even if they don't have money for the purchase.
Steps For Setting Up Your Account:
 Setting up your account is not difficult and involves just a few steps. Within each step, it is necessary to make some decisions which will impact how you accept customer payments and how quickly you will see the funds in your business account.
- Decide on the vendors and where you will establish a vendor account
- Submit applications for account approval
- Set-up credit card processing equipment or online processing features
Choose A Merchant Vendor
The major credit cards are: Visa, Mastercard, American Express, and Discover. American Express and Discover are independent companies which require you to apply to them directly for an account.
Visa and Mastercard on the other hand, are companies that have distributors for their products; those distributors are banks. You can't apply directly to Visa and Mastercard. Instead, you will have to apply at one or more different banks.
It is generally advisable to set up a Visa account at first. Almost everyone has a Visa credit card. In addition, the financial industry has been tightening their credit policies and procedures, making it more difficult for new businesses to establish merchant accounts with companies like American Express.
Setting up a Visa and Mastercard account first, then American Express and Discover accounts after some business revenue history has been created, is a good strategy for many new companies.
A Different Kind Of Loan
Finding banks where you can apply for an account is not difficult since most of them offer this service.
- Begin with a bank where you plan on holding business checking, savings and loan accounts
- Check with other local banks to compare fees
- Check online for merchant services
What many people don't realize is that a merchant account is viewed by banks as a type of loan.  When you allow a customer to charge a purchase, it is then possible to get the funds deposited into your bank account within several days. However, the credit card company won't see payment from the customer for up to 30 days.
If a bank refuses to let you set-up your account, you can then try one of the independent credit card processing companies.
There are also online merchant services that can be set-up. You can apply to a service that will allow you to accept online credit card transactions and payments.
These services either offer their own credit cards or act as an intermediary between a bank and your business. Popular online merchant services include the following.
Once you are set up to accept credit cards, you can add credit card icons on your ecommerce website to show visitors the type of payments you accept. Popular store builders offering shopping cart services that greatly simplify the process include the following.
Some credit card companies offer both offline merchant accounts and internet merchant accounts so you can accept credit card payments no matter how the purchase is made.
Applying For An Account
A bank views a merchant account as a type of loan. You are guaranteed payment after an authorized sale is made. The bank takes the risk that a customer won't pay the credit card amount due.
As mentioned, even when the customer does pay his credit card balance, it can take up to 30 days after the purchase before the bank collects the money. The bank is also taking the risk that a new business could fail and not deliver the goods or services purchased by the customer.
Because the bank views a merchant account as a kind of loan account, start-up businesses sometimes have problems finding a bank that will allow a merchant account to be established. If you are starting a new business or have been in business only a short period of time, it will help if you are able to present the following to the bank.
- Well prepared business plan
- Personal and trade references
- Projections of credit card transactions by transaction size and estimated total charges by month
- Any financial statements available (if you are already in business)
- Previous business loan information
Merchant Fees
There are fees associated with accepting credit card payments. When a customer uses a credit card to make a payment, the bank or credit card company will deduct a pre-set percentage of the sale. The balance is then deposited into your bank account.
The amount deducted is called a merchant discount fee. The discount fees vary between companies and it pays to shop around. Other fees associated with merchant accounts include the following.
- Application fee
- Terminal equipment purchase (if bought)
- Terminal monthly lease charge (if leased)
- Monthly statement fee
- Transaction fees
- Charge back fees
You will get a summary statement every month showing each transaction, summary totals, and the fees charged to the business account. Fees for online merchant accounts tend to be higher than offline accounts because there is a higher risk of fraudulent use of credit cards.
A word should be said about debit cards as well. Debit cards look and act like credit cards, but when a customer makes a purchase the money comes directly out of their bank account immediately.
Banks that offer merchant credit card accounts probably also offer debit systems. The process is almost identical to the one just described. In fact, many terminals now sold or leased, will accept both credit and debit cards.
Setting Up The Credit Card Terminal
When you set up your account, you will have an option whether you want manual or electronic processing in your storefront business. Online transactions, of course, are processed through the internet and don't require a terminal.
Most businesses today choose electronic processing because it costs less than manual processing. It is also much easier to complete a transaction this way. A manual system is the one where you get an imprinter for imprinting the credit card charge form. Large transactions must be called in on a phone to get an authorization number.
An electronic system is one that will automatically connect with the credit card company to get instant authorization. The electronic system can be used with computers or programmable cash registers or simply connected to the network.
The bank or credit card processing company will send you a pre-programmed terminal. This is the equipment used to do the following.
- Read swiped credit cards
- Accept manual input of the credit card number
- Dial the credit card company
- Provide an authorization number
- Record the transactions for fee charging and instant account crediting
The terminal connects to a telephone line or transmits through a computer software program and the Internet. There are software packages available today that will automatically record the transaction at time of purchase and make entries into the accounting system.
Maximizing Sales
Merchant accounts enable your business to accept credit or debit card purchases. It is recommended that at least Visa or Mastercard accounts are established at first. These are the most common credit cards consumers carry. Once the business is established then you can apply to other vendors such as American Express or Discover.
Accepting credit cards has almost become mandatory if you want to maximize your revenue. Credit cards can be accepted both offline and online in a storefront business or online in your web based store.
The first step is to find a reliable credit card company or bank that will work with start-up or small businesses. The important thing to remember is that even if you are turned down by a bank or vendor, there are other ways to reach your goal.
Related Resources From A Touch of Business:
Accept Money Online
Related Resources From The Web:
Top 10 Reviews For Credit Card Processing Reviews
100 of the Best Merchant Account
The InsideUp Sourcing Connection
Merchant Account Fees You Can Avoid
Credit Card Processing Fees Demystified
http://www.elementps.com/ Credit card processing fees shouldn't be a mystery. Watch to learn how actual Visa and MasterCard fees can clearly be identified. Then contact Element Payment Services, www.elementps.com, to set up a simple, easy to reconcile payment processing solution.
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