My Merchant Account Blog

Credit Card Acceptance

Friday, January 14, 2011

Whether you are just starting a business or have owned a business for years, you probably will want to accept credit cards.  Merchants who are just starting up seem to be somewhat fearful about credit card processing.  They think that it is a long ordeal.  Usually, this is not the case for most merchants.  Being approved for a merchant account is usually pretty simple, especially if you are doing less than $30,000 a month and not selling anything high risk.  North American Bancard is an example of a credit card processing company that specializes in small business.  (Each merchant account provider has its own definitions for high risk, so read through their Acceptable Use Policy and Terms of Service - this should tell you what services / product cannot be supported.)

Applying for a Merchant Account

As we previously wrote, You Are Approved for a Merchant Account in Less than 24 Hours, be wary of these companies - they will approve you for a merchant account, but after a few days of vetting the merchant, the provider might decline your application.  When applying for a merchant account, the provider will look at a lot of things and this depends on if you are a new merchant or you have been processing with another provider. 

For example, you might be on the TMF List / MATCH.  On your merchant application, you might say you are not on this list.  Once the provider finds out you are on this list, you probably will not be approved - or your account will be terminated / suspended if the provider sets you up in less than 24 hours.

Merchant Account Application

On the merchant application, you will be asked a few questions regarding your transactions and monthly volume.  If you are just starting out, it is difficult to answer these questions.  You might hope that your monthly volume will be $500,000, but depending on your business model / advertising, etc., it might take you over a year to reach this goal.  Try to be realistic in these figures when you are entering these numbers. 

Merchant applications vary, but all should ask the monthly volume.  Some applications will ask you for the highest transaction and the average transaction.  One important factor in this - if you enter $1,000 for the highest transaction, and you get an order for $3,000 - you will want to scrub / vet the transaction.  Once you have verified the transaction is legitimate (Fighting Fraud in your E-Commerce Store and Preventing Online Fraud), you will want to contact the merchant account provider to let them know about the transaction (It is My Merchandise and Services Its My Money or Is It).  Tell the merchant account provider what you did to vet / scrub the transaction and ask for a reference number (this will help you in case something happens).  The merchant account provider might also verify the transaction or put a hold on the funds for 24-48 hours while this is happening. 

Committment / Contractual Period

The last, and most important item to note in this post - do not apply for multiple merchant accounts at the same time.  Apply for one and wait.  Some merchant account providers require a contract - we have seen providers requiring anywhere from six months to three years.  If you happen to sign up with a merchant account provider (Company A) that requires a three year commitment and another one (Company B) that requires you a one year commitment - this alone might put your business at risk before opening your doors. 

For example, Company A might have a customer service / statement fee of $10.00, a monthly minimum of $25.00, and an electronic payment gateway of $10.00.  Company B charges you a customer service / statement fee of $10.00, a monthly minimum of $15.00, and an electronic payment gateway of $10.00.

If you choose to stay with Company A (since the contract is three years), you end up paying Company B a total of $420.00.  You might decide to possibly even split the transactions, using one provider the first half of the month and the other provider that last half of the month.  This might work, but again, some providers have an exclusivity clause.  If this is the case, you might be in breach of the contract. 

If you just decide not to pay Company B or use both (possibly violating the merchant account agreement), the merchant account provider could put your company on the TMF List / MATCH - causing you more problems.

This post is sponsored by North American Bancard.

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