What to look for when choosing the right merchant account company

What to look for when choosing the right merchant account company

Finding a merchant account should not be a rush job. Start researching credit card processing companies as soon as you decide your business needs one. Once you've decided that your business needs to accept credit card payments, take your time to evaluate the costs and services offered for merchant accounts from a variety of credit card processing companies.

There are many factors to consider when choosing the right merchant account. First and foremost, it's best to select one that is transparent when it comes to its fee schedule.

Merchant account company fees

• Start-up costs. To begin credit card processing with a merchant account, your business may have to pay a merchant account application fee or set-up fee. Fees vary between credit card processing companies.
• Discount rates. The credit card processing company will charge your merchant account for each transaction; this is called the discount rate. The merchant account discount rate is typically 1.5 percent to 2 percent.

Compare the fees charged to your business for operating a merchant account. Minimum monthly processing fees and annual fees exist for some merchant accounts.

Merchant account company features
Merchant accounts usually accept credit cards that are either swiped through an electronic reader or have the credit card number typed into the computer for orders received over the phone. If you will be using the same point-of-sale (POS) terminal for both swiped and typed transactions, find out if there is a higher fee for typed transactions. The merchant account discount rate for keyed-in cards is usually 2.2 percent to 3 percent.

The following are other merchant account features to consider.

• Number of credit cards accepted. Seek out a credit card processing company that works with all of the major credit cards: American Express, Visa, Discover and MasterCard. The more cards you accept through your merchant account, the more convenient it will be for your customers.
• Contract or not. Compare merchant account contract terms and duration of commitment or find a credit card processing service that does not require a contract at all for your merchant account.
• Customer service. Inquire about customer service for your merchant account, including about the hours the service is available. Ask if there are limits or fees associated with customer service for your merchant account.
• Business reputation. How does the credit card processing company stack up with others that provide merchant accounts? Check the Better Business Bureau for complaints about the company before committing.
• Credit card processing equipment. Determine how many credit card machines you will need with your merchant account and look for credit card processing companies that offer you the best deal. Some offer leases, others sell equipment, and still others provide free POS terminals for your merchant account.

Updated: November 20,2023