Olympic Merchant Services

Feeling the Olympic spirit, I began to look at merchant accounts as an Olympic event and decided to write an article helping business owners choose their "golden" merchant account. Winning gold is not necessarily about choosing the right merchant account provider, but choosing the right account type for your business. High-ticket merchants may benefit from a lower rate and a higher transaction rate while low-processing merchants may benefit from the lowest minimum requirements. Obtaining gold is not simply about pricing, but funding, customer service and trust.

Non-Negotiable Pricing
Merchant account providers incur real costs when processing credit cards. These processing costs are passed down to the merchant account provider from card associations and acquirers. These fees are non-negotiable and are the cost of accepting credit cards. Non-negotiable fees include interchange fees, card brand fees, and risk-related fees.

Interchange fees are the largest contributor to processing fees and are set by the issuing banks. This fee equals the amount paid by the merchant bank to the issuing bank of the customer's credit card. Interchange fees are public information and can be found on Visa and MasterCard's websites.

Card brand dues/assessments and acquirer risk fees are also examples of non-negotiable fees that your merchant account provider cannot control. These fees and assessments are charged directly by the card brands and acquirers' and are passed down the credit card processing chain. Interchange, card brand, and acquirer fees are simply the wholesale cost of accepting credit cards.

The rate that a merchant pays to process credit cards is called the merchant discount rate. As you have just read, many of the fees included in the merchant discount rate are non-negotiable but there is some negotiating power in the merchant provider fees and pricing above the wholesale cost.

Negotiable Pricing
In order to effectively compare merchant provider costs you must choose a merchant account pricing structure that has clear pricing. Pricing models such as "flat-rate" or "interchange plus" has the easiest pricing structure allowing you to compare merchant account provider pricing more accurately. Tiered pricing and enhanced recover reduced merchant accounts are less transparent and are harder to compare apples for apples. Choose the best pricing model for your business and obtain several quotes from trusted merchant account providers.

When negotiating with your prospected merchant account provider look at additional fees such as statement, annual, PCI compliance, cancellation, and transaction fees. You may be able to have these fees waived or lowered. For example, many merchant account providers will waive their statement fee if you sign-up for online statements.

Equipment
Be careful when signing up with a merchant account provider for free credit card terminals or other POS equipment. The trade-off is likely a long-term contract with hefty termination fees. It may be better to buy your POS equipment at a discount reduce the amount of time you are locked in with a merchant account provider.

Equipment leases are another area where merchants should be wary. Credit card terminal leases are quite unpopular with merchants and for good reason. Many processors were marking up the equipment by up to 1000% on POS equipment leases leaving merchants feeling locked-in and taken advantage of. If at all possible purchase your equipment at a discount from a trusted merchant account provider.

Funding
Ask potential merchant service providers how long it will take for credit card sale funds to be deposited into your business account. Some merchant account providers can take weeks, while others have your funds available to you next day. Having your credit card funds on deposit with 24 hours may be more important to your business than the lowest rate.

Customer Service
Customer service may not be important to your business when operations are running smoothly, but it can become extremely important in a blink of any eye. Complications and issues are going to arise. Ensure that your merchant account provider offers exemplary customer service 24 hours a day/ 7 days a week. Smaller merchant account providers who provide personalized service may be more desirable than the largest merchant account provider.

Trust
Business owners should trust that their merchant account provider is providing them with the best possible merchant account for them. All rates and fees should be fully disclosed to you prior to signing any paperwork. You should never feel like you are being rushed or that your questions are not welcomed. A merchant account provider who has earned the trust of clients will have referrals and an excellent track record. Ask friends or business colleagues for recommendations. Look for merchant account providers who provide go a step above the rest, providing valuable information and resources.

Accepting credit cards the Olympic way and wining the "golden" merchant account takes knowing what account type is right for your business and obtaining quotes from several merchant account providers using transparent pricing structures. Negotiating lower rates and fees can only be achieved on the merchant account provider mark-up (or the amount above the wholesale rate). Negotiate to have other fees reduced or waived, if possible.
Look for fast funding of your credit card sale money and 24/7-customer service. Stay away from expensive equipment leases and free equipment with long-term contracts and heavy termination fees. Most importantly the key to winning a gold merchant account will come from training with a trusted merchant account provider.