When your business finally decides to accept card payments, the next thing you need to roll up your sleeves for is setting up a merchant account. This financial wallet acts as a unique bank account designed to allow businesses to process payments and chargebacks. Interestingly, as a business owner, you can easily have your merchant account up and running by signing up with any of the existing merchant service providers. Here is all you need to know when setting up a merchant account.
What are the Different Types of Merchant Accounts?
The global payment service industry hosts an array of merchant services providing a cluster of 5 major account types. The segregation of these account categories is determined by two factors: the method of service provision applied and the perceived risk of an enterprise.Retail Merchant Accounts
Retail merchant accounts are best suited for businesses that run retail stores locally or regionally, including department and grocery stores. Setting up a retail merchant account is associated with low setup costs. However, while you may not have to worry about additional fees, these accounts have demanding thresholds that must be met prior to application. For instance, retailers must have at least one card terminal, and a minimum of 70% of sales initiated through their terminal.Internet Merchant Accounts
This type of merchant account works well for e-commerce enterprises. With an internet merchant account, businesses enabled to accept credit cards online without necessarily having these cards swiped from a physical store. The customer provides card details over a secure webpage, and the credit card payment process begins. Since payments are not made over terminal equipment, the processing fees of internet merchant accounts are often high.Mobile Merchant Accounts
Mobile merchant services designed for businesses equipped for mobile payments. With the mobile money industry rising gradually, these accounts are becoming increasingly popular. This is probably because a mobile merchant account is easy to set up and has low-risk exposure. However, mobile accounts tend to transact in lower sales volumes than traditional accounts. As a result, such accounts attract high processing and transaction rates.Telephone Merchant Accounts
A telephone merchant account allows you to accept credit card payments over the phone. It is the go-to choice for ventures that rely on infomercials for business. These services are ideal for all business types, whether mobile, retail, or online. While some merchant service providers offer payments over the phone as an added functionality, businesses can use telephone accounts as a full-fledged option.Mail Order Merchant Accounts
For businesses interested in accepting payments over mail orders, the mail order merchant account makes the best choice. With a mail order account, customers are allowed to input their card details on a processing terminal’s keypad to process payments. Although the transaction rates of a mail order merchant account are high, the processing fees are usually low.Where Do You Get a Merchant Account?
In the recent past, getting a merchant account was one gruesome experience. Merchants were required to present their business licenses to the provider’s physical location for verification. But with the inception of the internet, finding and signing up with a merchant account service provider is quick and easy. Having thoroughly reviewed your preferred merchant service provider, all you need to do is visit their website and apply for a merchant account. The website should present a variety of merchant services from which you get to choose the functionalities that best suit your business. A good merchant provider should offer expert advice to help you make the right choices. Alternatively, you can visit the provider’s offices as indicated on their website and get your account set up in minutes.What are the Fees and Costs Associated with Opening an Account?
Regardless of your choice of a merchant account provider, it will cost you some fees and charges to set up an account. While these fees vary with different providers, here are the typical costs to expect;- Set Up Fees – This is the amount you pay to register and set up a merchant account. Setup fees range from a few hundred to thousands of dollars, payable upfront.
- Card Capturing Fees – Retail businesses and online stores require purchase terminals; whether online or physical, through which the purchasing customer’s data captured. Integrating a merchant account with a data capturing system comes with a cost well known as capture charges.
- Processing Fees – In addition to setting up a merchant, businesses must link these accounts to card processing networks, which attracts a range of processing fees. Such charges include interchange and assessment fees.
How to Pick the Right Service Provider for Your Business
With the number of merchant account providers increasing by the day; it can be quite confusing to find the best company for your business. However, when choosing a service provider, there are factors you definitely want to consider. They include;- Fee Transparency – The overall cost of acquiring a merchant account can be quite overbearing; especially when there are unknown, hidden charges. Go for a company that is transparent with its pricing model and fees.
- Customer Support – Things can always go wrong with credit card processing. You need a service provider that is readily available any time you encounter problems with card payments.
- Security – At the top of your concerns when choosing a service provider should always be security and data protection. The best provider is one that is PCI compliant and a company that reviews its security systems regularly.