Credit card merchant accounts for small business can make or break you. By not accepting credit cards, you can actually deter potential customers from buying from your company, since credit and debit cards are the most common form of payment nowadays. Chances are, the small fees you'll incur to accept credit cards will pale in comparison to the profits you stand to gain.

The pricing and costs of merchant accounts vary. Factors that come into play include the type of transactions you're doing (face to face versus over the phone or online) and method of transacting (using a credit card machine as opposed to an Internet service). Consider the following types of fees:

1. The discount rate. This is the main fee you'll pay for merchant services.

2. Rates charged by Internet merchant account providers. These are slightly different than those of traditional services.

3. Other common fees that come with merchant accounts, like batch fees and gateway fees.

Action Steps
The best contacts and resources to help you get it done

Understand the different types of merchant account transactions

The discount rate is a percentage of a transaction, usually ranging between about 1% and 4%. The difference between 'qualified' and 'non-qualified' transactions is a couple of percentage points. While it may not seem like much, it can definitely add up. If you have a retail storefront, keying in credit card numbers will most likely bump you up to the higher mid- or non-qualified rate (although address verification can save you here). Even if you do swipe the card, you may be subject to higher rates if the card is a corporate card or an international card, or if it's associated with a reward program, like earning frequent flyer miles. Mail-order and Internet transactions are often automatically charged the non-qualified rate due to higher fraud risk.

I recommend: Read up on the difference between qualified, mid- and non-qualified Internet transactions at Merchant Focus. You can find a great explanation of the different types of transactions as well as address verification services at Got Merchant Account.

Consider using online merchant account providers

Whether you have a storefront, mail-order company or Internet-based business, you can use online merchant account providers and forgo the credit card machine. These range drastically in sophistication, but expect to pay anywhere from $20 to $60 per month plus discount fees. Some of these require a special software program or card reader, but overall, this may be the best solution for those who need to process transactions in a variety of situations.

I recommend: To get a good idea of rates offered by reputable companies, take a look at 2Checkout.com, PayPal and Intuit.

Get the scoop on other fees charged by credit card merchant account providers

There are quite a few other fees that may be associated with your new merchant account. These may include an application fee, monthly statement fee, annual fee, batch fee and early termination fee. You may also have a monthly minimum, so if you only accumulate $10 worth of fees by the end of your billing cycle, you may end up paying more, if your monthly minimum is higher than that. It's also important to note that in addition to the discount rate, you'll likely pay a discount fee of anywhere from 10 cents to 50 cents for each transaction you process.

I recommend: Merchant Express and MerchantSeek both have guides to help business owners understand the fees that come with a credit card merchant account.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Accepting debit cards is also something you'll want to consider when looking for business merchant accounts. Generally, a debit transaction costs much less than swiping a credit card since pin-based transactions are more secure. Expect to pay anywhere from 10 cents to 50 cents per transaction, although you may have a gateway fee or authorization fee in addition (although this fee is also very small).
• •  If you're having trouble finding reasonable rates for your high-risk business, consider using an international merchant account. Since off-shore accounts don't have to comply with U.S. regulations, you could get a better deal this way. The flip side of this is that since U.S. regulations don't apply, your business may not be as protected.

For most small businesses today, the ability to accept a full range of non-cash payments is essential to success. The choices include credit cards, debit cards, electronic checks, stored value cards, gift cards, smart cards and PayPal transfers.

In order to accept those forms of payment you'll need to set up some type of "merchant account" with a bank, credit card processing service or other vendor. Once you are approved for the merchant account (through a merchant account services department) and have set up the necessary hardware (card swipe terminal and receipt printer), software or online service, you'll be ready to begin accepting electronic payments via your mechant account.

The advantages of merchant asccounts -- and thus the ability to accept "plastic" payments -- are huge. Whether you sell to consumers or business-to-business (B-to-B), customers are more comfortable paying for goods and services by non-cash means. And for Web-based sales, credit card, PayPal and electronic check payments are a must.

But merchant account providers do consider online and telemarketing businesses to be a higher risk for credit card fraud. Startups that fall in those categories are often scrutinized more closely, and may pay higher fees to begin with and be asked for a deposit. Once your business establishes a track record, however, you can often request the deposit back and negotiate lower fees.

Business.com's "What Works for Business" blog is a great way to keep up with the latest solutions, trends and strategies for small and medium business -- including merchant accounts and payment systems.

Here are some choices for establishing merchant accounts or online merchant accounts:

Action Steps
The best contacts and resources to help you get it done

New Low Cost Solution

QuickBooks, which already makes the most popular small business bookkeeping software, recently introduced an off-the-shelf credit card processing solution that works on your desktop PC. It's called the QuickBooks Credit Card Processing Kit, sells for $39.95 at major office supply and software outlets, and offers a quick, low-cost solution for startups.

I recommend: Install the software and apply for a QuickBooks merchant account with a simple online application. Once approved, you can start taking credit card payments within minutes. Just enter customer information on your PC and receive transaction approval online within seconds. The software also lets you create custom invoices and estimates, bill customers for recurring charges and track payments. The monthly fee of $14.95 is lower than what many banks or card processors charge, and there is no monthly minimum fee.

More Choices from PayPal

PayPal, which started as a simple system for online businesses to accept payments, has blossomed into a full line of electronic payment solutions for small business. Customers can pay by credit card, debit card, bank account or their special PayPal account.

I recommend: PayPal's new Virtual Terminal solution lets small businesses easily accept credit card payments online, as well as by phone, fax or mail. By taking the PayPal route, many startup businesses will be able to bypass the sometimes rigorous merchant account setup process at a bank, and start taking credit card payments immediately. At PayPal, the per-transaction fees start out somewhat high but drop as your volume increases. There are, however, no monthly fees, no setup fees and no gateway fees. There are free tools especially for eBay merchants, and antifraud systems at no extra cost.

Get set up for a merchant account quickly

Some firms specialize in getting small businesses up and running quickly to accept credit card payments, sometimes with free setup.

I recommend: FirstData and AVPS can tailor a merchant account credit card processing solution for almost any type of business.

Look for low rates, no fees and free equipment

Credit card payment processing is a highly competitive field for both retailers and online merchants. Remember that savings don't only come as a lower rate, but in cost reductions from having your system set up properly, your charge-backs reduced, dependable equipment, and your funding on time.

I recommend: CreditCardBiz.com is a fast-growing credit card payment processor that handles about 70,000 merchants nationwide. They provide free state-of-the-art equipment, free user training, free replacement equipment shipped overnight, plus no application or annual fees.

Comparison shop for credit card processing services

A great place to shop and compare services is BuyerZone.

I recommend: At BuyerZone, complete a short request form and receive free rate quotes and information on merchant accounts and credit card processing.

Make your merchant account mobile

Handheld wireless technology lets you accept credit card payments anywhere.

I recommend: Card Service International and Authorize.net - both industry leaders - offer complete wireless solutions for small business.

Line up a trade group discount

Some small business associations, business membership organizations and other industry trade groups offer discounted merchant account solutions as a member benefit.

I recommend: Two major small business organizations to check into are the National Federation of Independent Business (NFIB) and National Association for the Self-Employed (NASE).

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Credit card fraud is growing. Ask the merchant account vendors you are considering what fraud protection services they offer.
• •  Merchant account fees and charges vary greatly. Your costs include the discount rate (% of each sale you pay to the service provider), flat per-transaction fee, equipment rental, monthly minimum and 'chargebacks' for customer returns, disputes or cancellations.
• •  For online sales, decide if you need real-time processing or can use lower-cost 'batching' where you collect card info and process by hand offline.

Merchant accounts are now a big part of nearly any business. Whether it's an Internet gateway credit card merchant account for an online business, or a more "traditional" point of sale merchant account for physical retail store fronts, business leaders rely on merchant services for small businesses to help them serve a greater clientele, namely, those who like to pay with plastic. Because of today's cashless trends, almost any customer wants the option to pay by card.

Businesses have some options when they are considering training staff for implementing merchant accounts. There are online links to education courses, informative setup tips, and more info on how to chart business growth with a merchant account provider. Readers can find:

1. Tips and information on choosing an online gateway domestic or international merchant account system, with pricing and other factors.

2. Training and guide info on point of sale or POS merchant accounts where a machine-based system can be more user-friendly and direct for a business where everything takes place under one roof.

3. More on various kinds of business merchant accounts including mobile and wireless credit card processing options (and how to transact them).

Action Steps
The best contacts and resources to help you get it done

Get training from your credit card merchant account vendor

In the competitive merchant account services world, vendors will throw in quick, free training on merchant services as part of the deal.

I recommend: American Express merchant account customers can find plenty of training information on the financial giant's site. Discount vendor CreditCardBiz.com promises full, free training to clients. Wells Fargo has manuals online and will train you over the phone.

Find resources for Internet merchant accounts

One way online businesses streamline their operations is with premiere choices of online or Internet-based merchant accounts where all of the credit transaction is accomplished 'off-site' through a secure portal. Security is key for these kinds of merchant accounts.

I recommend: Get some solid recommendations about Internet merchant account pricing for websites on Web Hosting Geeks. Find more on choosing an Internet merchant account with FindMyHosting.

Look for info and training on retail merchant accounts

Other shops use equipment-based merchant account services. The web also has training resources for businesses contemplating this kind of setup. Traditional point of sale systems allow for convenient site-based processing and usually carry better security options than other types of systems.

I recommend: Find training options for point of sale merchant accounts on the Assured Computing Technologies blogspot. Business helpers MYOB offer training regarding more options for credit card processing including POS merchant accounts.

Locate more on various credit card merchant accounts for small business

Other kinds of merchant accounts like mobile or wireless setups require their own kinds of educational resources for choosy business leaders looking to integrate these systems in-house.

I recommend: Seekers can find a variety of education options at the Banker's Academy online including tips for credit transactions and technologies like mobile merchant accounts. Find more training on merchant accounts systems from Your Merchant Info.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  For any kind of merchant accounts education and training, make sure the training classes or materials address the specific needs of your company. Your merchant account should be the most efficient way for customers to pay and only include the equipment and gear necessary to set up that system. Shop around to find the best fit for your business.