Use Caution When Opening Merchant Account to Accept Credit Cards

If you want to start accepting credit card payments online for the first time, then this article is a must read. Before obtaining a merchant account, make sure you shop around and do your research. Let the buyer beware certainly applies when choosing a merchant account provider, as there are many important aspects which need to be considered. Making a poor choice is likely to result in numerous complications and high unexpected ongoing costs.

10 tips to choosing a merchant account provider:

1. KNOW YOUR NEEDS - Do you want batch (manual) payment processing or real time processing? If you expect low volume sales then manual processing maybe a viable route. Before approaching merchant account processors know your actual or expected margins, transaction volume and internal resources. What will your hardware, software and service requirements be? You can go directly to banks or ISOs for merchant accounts, however putting together all the components to e-commerce (catalog system, credit card processing, order system, billing system, etc) can be a nightmare. This is where it sometimes it can pay to partner with a 'holistic' payment processor which may charge slightly higher rates, but can provide complete and secure payment processing merchant accounts.

3. RELIABILITY & INTEGRITY- Check the merchant account providers trading history and try to get testimonials or reviews of the processor. A dishonest processor can tack on declined transaction charges in numerous ways, so it is important to work with a reputable processing company. Common complaints against merchant account providers include sudden rate increases, long term lock-in contracts, hidden fees and add-on charges, high monthly-minimums, heavy rolling chargeback reserves, high chargeback fees, and surprise monthly processing limits.

4. SPEED OF SERVICE - If it takes more than 3-4 business days to get your merchant account up and running, then start questioning the setup and capability of a processor. Likewise if approval is instant or overnight, alarm bells should also start to ring. Setting up a new merchant account should take 2-4 days to allow for a thorough risk assessment and appropriate account setup.

5. FEES - Make sure you gain full visibility of all fees (application, setup, statement, transaction, discount rate, and fraudulent transactions - chargeback's). Ask for a full disclosure of ALL merchant account fees and charges before signing anything! Also bear in mind that depending on your business setup; your merchant account processor may have to hold a reserve on your account.