Credit Card Processing: Choosing Merchant Accounts for Your eCommerce Store
January 19, 2011 
6 Comments
This is a guest post by Havalah Gholdston. If you want to guest post on this blog, check out the guidelines here.
If you’re just entering the fray of choosing merchant accounts for online credit card processing, it can be a bewildering and dangerous arena. Here’s a look at what not to do and which questions to ask yourself and your company before committing to a merchant account provider.
The first advice you will find when researching this topic is don’t use your bank. Banks generally don’t have the technology themselves and outsource the wireless processing and website ecommerce to an actual merchant account provider. On paper, it seems logical and easy to sign up for a merchant account through the same bank that holds your financial accounts. But in practice, this is too often not the most economical route. So skip the middleman and pick your own merchant account provider.
Do the research on providers that seem to offer what you need – if there are any complaints about them to the Better Business Bureau, try again. If you come across forums of users citing complaints with the prospective provider, keep looking.
Check for technical support options and customer service reports by users: do the complaints apply to your situation? What options do they offer for access to customer service and tech support? Make sure they offer what you need. Try to imagine any emergency possible and place that next to the offered support.
Additionally, all reputable merchant account providers should offer a 100% money-back guarantee, which will come in handy if something bad happens somewhere down the line but also will allow you to test out the service to make sure it’s really the right one for your company’s needs.
Hardware
This is another “don’t”: Don’t agree to leasing equipment. Once you’ve chosen a provider, buy your own credit card processing equipment. When you agree to lease, you also agree to 3-4 years of lease payments that cannot be cancelled and will cost you thousands more dollars than you would have spent to just buy your own equipment.
Fees
This one is a big one. Possibly the biggest one. You want your prospective merchant account provider to have low fees amongst the rest of your options, but not suspiciously low. If the quoted fees seem too low, too good to be true, they probably are and you will be stuck with hidden fees or pay the price with cut corners on tech support, or something of the like.
Examine your needs – does your company need to process credit cards manually or in real-time? Manual processing is still right for low-volume sales situations, can protect you from fraud and it costs less. But it takes time. Real-time processing is faster and better suited for the large-volume and/or online businesses.
If your company does international business, you will definitely need to make sure the chosen merchant account provider allows for international credit cards. If your company processes these international transactions without the provider’s knowledge, it could mean the end of your account with them.
Watch out for merchant account providers that try to require an application fee, setup, installation, programming or annual fees. Just go somewhere else when you encounter these – these types of fees are not related to the expenses of a merchant account, so if a company is trying to make you pay these upfront, you will know they are dishonest.
Check closely for monthly transaction caps. You do not want to be taken by surprise with this – it could be the downfall of your entire business. Especially if your business is high-volume or you expect to have high-volume transactions each month.
A good tip for looking into fees is to request sample contracts from each prospective provider – then compare these side-by-side. Not only could this give you some solid negotiating ideas, but it should also allow you to accurately crunch the numbers and discover which provider is the best for your company’s needs.
The best overall tip for choosing a merchant account provider is to read and understand all the small print on the contracts. This is vital.
Havalah Gholdston has contributed to blogs and websites since 1999. She has been researching and writing about credit card processing for six years.
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This article only briefing touches on one of the most important aspects of the merchant account selection – selecting a merchant account provider with a solid reputation. The industry is crowded with merchant service providers who use underhanded tactics to entice new merchants and then treat them poorly once under contract. We recently created the website creditcardprocessingscams.com to try and provide some overview for merchants, and most importantly provide a forum for merchants to speak about their experiences with merchant service providers. We would appreciate any help in spreading the word and giving merchants an opportunity to change the industry through their collective voice.
Thanks for stopping by John. I completely agree with what you are saying. Thanks for the good points and the quality website that you established.
We appreciate the support, we known we’re new but hope we can offer a unique perspective for individuals concerned about signing with a merchant service provider.
Everyone has to start somewhere and it is nice to see you providing a great resource for businesses.
This website is awesome. I constantly come across something new & different right here. Thank you for that data.
I am glad you enjoyed the article. Thank you for visiting.