Advice on Selecting a Merchant Account

Merchant Warehouse |

November 14, 2010

Choosing a merchant account provider is like any other business decision you make. It’s important. These days, of course, they are all important. Obviously, you have to consider every one of the many variables, both positive and negative, and need to get honest answers to your occasionally tough questions.

Until you are satisfied that you are clear on all the important issues and understand how everything works, do not sign anything. Make sure that you are getting a service plan appropriate for the type, volume and nature of business that you will be doing, both now and in the future.


“Average sale” and estimated volume

 Every processor that you will consider choosing will want you an estimate of your average sale and your total monthly volume. When combined with information from your credit report and trade references, the processing company can establish a level of risk for your firm to guide them in setting up the particulars of your merchant account. If you want to pay the appropriate fees and get the best deal both now and later, you need to be forthcoming and candid about your business and its revenues.

If your estimate is too high, it could derail the account setup process and require you to provide more financial data than you thought. On the other hand, an estimate that is too low may make you appear to be a greater risk than you are, and you will not benefit from your actual business volume. Account representatives at all the leading processing firms have experience in estimating charge volumes and average sales amounts (“tickets”), so ask for help if you need it.


Real Rates vs. Advertised

 It may be that the “low, low” rate you see advertised is, in fact, an “introductory rate” that expires in a certain amount of time or has other qualifying requirements. Make sure that the rate you are quoted is actually for the types of transactions that you will be processing, and not just for the first month or two. If you have a MOTO (mail order, telephone order) type of business and sign up for a standard retail account, you could end up paying additional processing fees.

When you need to handle certain kinds of transactions, like in MOTO dealings, you need to have those features added to your merchant account in the first place. The time to get all the “types and kinds” of charges worked out is in the very beginning. Not only do you want your processing to be “road ready” at the very start, you will want to avoid any breaks in processing continuity that may be required to change or add features down the line. Get yourself set up right the first time.


Fees and Other Surprises 

 It may be that the account providers you are considering do not require a contract. Unless there is a good reason for you to do otherwise, it is usually advisable to go with a company that doesn’t require a long-term contract. There is some business psychology at work here, too: If you can cancel your merchant account at any time and for any reason, a good merchant account provider may work harder to keep you as a customer. It is not always the case – different companies have different cultures, and people vary, of course – so use your own insights about human nature to figure out the best way to communicate with the sales reps you are meeting.

The more you prepare yourself for the meetings and phone calls with these company representatives, the better information you will have about the various fees and charges that you will be discussing. Take the time to do adequate homework and study the industry. You will then be able to plow through the various applications without wasting time having all the different fees explained to you.

Product and industry knowledge will also empower you to question any fees that you haven’t heard of, as well as those you still don’t understand. Obtaining an estimate or a quote is a far cry from getting a complete list of fees, so graciously accept one figure for the former but always press for all the figures that make up the latter. One of the best clues that you are not done shopping around is if a company hesitates to break out all the fees in their billing examples.


Support and Termination

 Always ask for an explanation about how to cancel your account down the road, even if it may seem odd to bring it up before you even sign a deal. Ask about the “termination fee” and any specific time commitment? Some merchant account contracts automatically renew if you don’t close the account with a written notice. Don’t forget to ask about all of these things, and also review all the steps required to settle up a closed account. You don’t need any surprises.

Tech support is crucial, of course. If you are considering a company, and it covers all the bases but doesn’t have a tech support staff, you should probably consider that a deal-breaker. A company with departments dedicated to certain specialties – accounting, support, customer service, sales – is more likely to have expert help available when you have concerns about your billing, need some terminal programming checks or want to get a new wireless terminal up and running before you lose any more offsite sales revenue doing it the old way.

Do not put yourself at the mercy of someone else’s “eight-hour day” for resolving customer service requests (meaning it will probably be “tomorrow”). A 24-hour support line is a good indicator of a company’s serious commitment to its customers. The ideal, of course, is to have a direct phone number for tech support – and a name or two, also – because you will then have excellent evidence of the fact that the merchant account firm is serious about keeping you as a customer.

Will you get everything on your wish list from a single firm? Perhaps, and it may be that several companies can offer slightly different packages, each with its own advantages or omissions. Do the best you can to design and devise the plan that will work for you, then put a few young, energetic sales reps to work fitting their company’s offerings to your needs. You may even hear some creative ideas about handling sales that you hadn’t considered. The fact is, the “shopping process” just described in this article is a very good way to refine your thinking about your business, and feedback from the merchant account firm you choose will help you further enhance how you do business.