The ABC’s Of Merchant Accounts
If you want to be able to offer your customers the convenience of making a payment with a credit card or check electronically, you'll have to apply for a merchant account. Before you sign on the dotted line, shop carefully and weigh your options. Having payment processing abilities can make your business; choosing a bad merchant account provider can break it. All merchant account providers are not created equal and neither are the financial packages they'll offer to you. The following are the type of companies involved when getting a merchant account. Acquiring Bank - All merchant accounts must be sponsored by a bank that is a member of the card associations (Visa & MC). They are responsible for depositing the funds into your checking account. Payment Processor - Most acquirers outsource the payment processing to a third party. They are responsible for authorizing, capturing, settling and clearing transactions through Visa & MasterCard's network. Gateway Provider - This applies to Internet/Moto merchants using a secure gateway service such as Authorize.net, Verisign, etc. This includes collecting the customer’s credit card information and securely processing it over the web. Merchant Service Providers (ISO/MSP's) - Most companies are merchant account providers (ISO/MSP's). They are responsible for setting up the merchant account through the acquirer and payment processor. Most providers handle the daily/monthly tasks such as sending out statements, customer service, in house underwriting, etc. Another option is to use a company the industry calls a third party merchant account provider. These are companies that allow you to accept credit cards on their behalf, using their merchant account. But they are risky to deal with due to higher rates and no legal rights. Always find out if there are any fees whatsoever that aren't disclosed. Some of things that you should be wary about are: - $500 Cash Reward if you can find a Better Deal. - These rewards are actually a cash refund after you sign up. - Lowest Prices Guaranteed - They offer money only if you sign up - No Setup Fee - usually they have another name for it - Instant Activation These types of accounts have severe limitations attached. - No Merchant Account Needed - MasterCard and Visa do not allow