Merchant Accounts

National Processing, Inc.

Guide to Merchant Accounts

How to start accepting credit cards
By Daniel Kehrer

	Key Merchant Accounts Tips Consider your own bank. Most major banks offer credit card processing services of all kinds, including online business merchant accounts. Take your merchant account mobile. With the right technology, you can now accept credit card and debit card payments anywhere, anytime with handheld wireless technology. Consider QuickBooks. For low volume merchants, their off-the-shelf credit card processing technology can be an easy solution.

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.

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.

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.