The ability to accept multiple forms of payment, including credit and debit cards, is a must for any business owner today, particularly if your company has an online component. Sure, society isn’t quite cashless yet, but many people rely on their current cards to make day to day purchases, and they’re essential in the world of online purchasing. You can’t simply put out a sign suggesting you take credit cards, though. Instead, to make that happen, you have to have a merchant account.
Toward a Definition
Basically, a merchant account is a kind of bank account where you place your funds from a customer’s credit or debit card purchases. You can’t have direct access to that account, though. Instead, you tie your company’s bank account to that merchant account, and when the funds are deposited, they’re then routed to your current business bank account.
Wondering who needs a merchant account? Anyone who wants to do business using credit or debit cards requires access to a merchant account.
Merchant accounts are initially made through merchant services providers. They’re the intermediary between banks, your customers’ cards, and your business. They typically have a range of services available to businesses. They allow you to accept all forms of electronic payment. They also usually offer you the PCI compliance necessary to accept credit and debit cards. Often they include the technology you need to track those payments, too.
Selecting the Right Provider
Not all vendor relationships are right for your business, and that’s as true with a merchant services provider as it is anywhere else. For many people, the focus is solely on the fees. There are four main fee structures you need to consider. The first is an interchange-plus model. This type itemizes the fees and markups for you, then lists exactly what you’re paying on a monthly statement.
A Subscription model is the second type. Here, you don’t pay percentage markup on transactions. You pay a per-transaction fee and one flat monthly subscription fee. Tiered pricing is also available. In this model, all of your transactions are classified into qualified, mid-qualified, and non-qualified categories. If you have a qualified transaction, you’ll pay the lowest possible rate. As you move down the scale, though, those rates go up.
Flat rate is the final type to consider. In this setting, every single transaction means you pay the same percentage and transaction fee, no matter what the cost. One of these isn’t necessarily better than the other. The key is to know what kind of volume you process along with the type of transactions you deal with so you can decide which model might save you the most money.
Fees, though, aren’t the only aspect you’ll want to consider. You may also want to consider processing time. Every merchant services provider holds the money for a different amount of time. Some offer immediate access to funds while others could make you wait for up to a week. Decide what’s going to work best in terms of cash flow for your company in this area carefully.
Protecting your business has to be at the forefront of your concerns as well. Every merchant account provider you consider should have extensive PCI compliance protocols to help prevent any fees on your end. Fraud protection should also be built in. Remember, data theft is a multi-billion dollar industry today, and ensuring that you’re not subjecting your customers to data theft is key. A provider should have multiple fraud management filters to help reduce the risk of compromised customer information.
Customer support should be your last area of consideration. Technical support likely isn’t at the front of your radar, but it absolutely should be. Payment processing issues can crop up almost any time, so you need to ensure the processor you choose offers live support as well as a number of other support options so you can reach out to get help when you need it the most.
A merchant account is nothing short of required to do any kind of business today, but with so many different providers out there, it’s worth it to take your time and evaluate each before you select a provider that’s perfect for your business. In most cases, you’ll be asked to sign a fairly lengthy contract with a given provider, so make sure you know what’s right for your company before you sign on the dotted line.For information on how Y2Payments Merchant Accounts work, give us a call today at 888-693-1850.