When you start a business, you need to consider how you will process credit cards. This is done through a process called a merchant account, there are a variety of different accounts available and the one that best suits your needs will depend on the type of business and physical setup you have for your company. Gone are the days where businesses only accepted cash or paper checks.
We now live in a virtual world where plastic is the way to pay. Your business will have no chance of succeeding without accepting credit cards and acquiring consistent and quality credit card processing accounts to do so.
Depending on the type of business you run, you can physically pick up the card at your location where the customer will actually swipe the card physically or you can obtain information over the internet through your online web store. No matter what type of platform you use, it’s important to make sure you consider all options for your business.
A merchant account is an account with a payment processing center or ribbon that allows you to physically receive and withdraw money from a credit card for your business products or services. Many different platforms exist including physical location, e-commerce and telephone processing. The beauty beyond credit cards will allow you to have customers from all over the world opening up many opportunities for you to grow your business.
There are two types of merchant service accounts, namely card and cardless. This basic type also has various subgroups, which we will discuss in detail below.
The card account is just that, the card is present at the time of swiping the card on the transaction. This is a type of transaction where merchants can take a physical credit card from a client and swipe it through their magnetic card reader. This type of processing account is extremely low risk because the customers themselves are present when they make a purchase and are asked to sign, indicating that they have made a purchase.
This merchant account will also give you the lowest fees and rates. Physical retail locations will want to consider this type of account, as it is most convenient for their customers and will cost them the least amount of money in the long run. This is also important for retail locations like these, consider mail order credit card processing accounts too.
When a seller has a portable credit card machine, it’s called wireless merchant account processing. The seller will still swipe the customer’s card in the same way but the credit card machine is actually portable and wireless allows portability and use of the machine in multiple locations. Costs with this type of account remain very low but equipment costs are higher for this type of unit.
This would be a good choice if you have a business that needs to accept credit cards while you are out in the field. This includes home improvement, craft sales or a farmer’s or salesperson’s market. This will greatly increase the number of sales you can receive from your business.
A store and forward account is a type of credit card processing account where credit card information is stored but not processed into a handheld machine. After the unit is connected to a telephone line and internet connection, the unit will process all credit cards that are stored.
Because real time credit approval is not given. It is an ideal choice for on-the-go business and requires credit card acceptance but has a low ticket value and few credit card rejections. This is very similar to a wireless account but more cost-effective for merchants.
There are several types of smaller accounts designed for specific businesses. The first is a grocer’s service account, specifically designed for locations selling perishable, gas-free food. It doesn’t have to be a huge market but it should meet the guidelines. This type of account is generally considered very low risk and has very low fees. Lodging accounts are for businesses located within hotels, motels, or other units where customers stay overnight.
Lodging accounts have significantly higher rates than most gift card locations. This is due to the fact that various unforeseen charges can be accumulated during the customer’s stay which may result in the card being rejected at the final point of sale. One of the last types of special card accounts is the restaurant merchant account. This allows the restaurant to authorize a customer card and then return and adjust the gratuity.
This type of restaurant account can be a little tricky to use and can end up costing the restaurant a high tipping amount. It’s important to consider all of these options before signing up for a restaurant processing account.
Now we will discuss absent card accounts. It’s exactly as it sounds the physical card wasn’t with the vendor when they retrieved the credit card information. This will be the primary account type for all Internet-based businesses, telephone sales, and mail order businesses. It is not possible to guarantee that the cardholder is present at the time a booking is made with the card.
The only way you can prove it is with a present card account as the customer has to swipe the card in the vendor process and can be asked for identification if necessary. A no-show card account is a much higher risk because of this and will in turn have much higher fees. When you review the various credit card processing solutions, you will have different rates for existing merchant accounts with non-existent cards. This is even true if your company has both types of accounts. It is important to consider all of these things when determining the best option for your business.
An Internet account is a no-account card used by e-commerce businesses to process orders in real time over the Internet. This is all done through an electronic gateway that will accept or reject the card in an instant. If the card is declined the customer can use another card or their order will not be processed. This type of account is used when the Internet is the primary store front for a business and most of its sales are made this way.
It is important to have a good payment processing gateway when working online as it allows totals from your website shopping cart to be processed directly into the merchant account without human interaction. This makes it easier for customers to make purchases on the spot without anyone helping them.
Using this form of payment processing gateway and processing account will allow websites and online businesses to accept payments 24 hours a day seven days a week anywhere in the world. Most online merchant accounts will also allow the option for merchants to enter customer information for processing. Online transactions will have significantly higher fees than your existing card account because the various risks associated with a card merchant account do not exist.
Mail order accounts are one of the most popular types of cards that do not have a merchant account. The way a mail order account works is that the customer fills out all of their credit card information on a card or order form which is then sent to the customer for processing.
Merchants will usually enter all card information manually and then process the card. After the card is successfully received, the order will be fulfilled. Mail order merchant accounts receive the best rates of all non-account cards, as they tend to have the lowest drop rates for this type of credit card processing account.
Another type of card for which there is no merchant account is the touch tone telephone merchant account. This type of merchant account operates exactly as you would expect. The customer or merchant enters all of their card information via a touch tone phone for processing. No credit card equipment required All card information is collected from telephone and verbal prompt systems and then processed.
The system will automatically approve or reject the transaction. An authorization number will then be provided which should be marked on the receipt for the customer. It is very important that you have a printing press for this type of transaction if possible. Rates on this type of merchant account are significantly higher due to the risk as well as the fact that a third party touch tone system will usually be involved.
It is important to think through all of these options for your business to decide which one is the best fit for you. Many merchants do need more than one type of merchant account one for their physical store location and another for their website ecommerce store.
Take some time to imagine how you will process credit card transactions and consider whether your business requires on-the-go payments, online payments, or customers shipping orders. You also need to think about what the average number of your transactions will be. This transaction average or number of tickets will determine some of your costs as well. It is important that you have a good idea of where this transaction amount will fall.
One thing to keep in mind every business may have more than one type of merchant account. The store may have your traditional physical merchant account and they may also run an ecommerce store and have a web based merchant account for taking credit cards on their website.
The biggest difference between merchant accounts is the format in which they accept payments and monthly fees and discount rates for using each of the different account types. Your costs will also depend on the type of business you run. Fees and discount rates are determined by the business and the risks associated with taking cards in each environment.
It is important to take the time to thoroughly research all of your options when it comes to the perfect merchant account solution for your business. If you take the time to review all the different areas, it will make decisions easier and allow your business to handle credit card processing within its means.
The ability of a business to process credit cards will dramatically affect how successful the business is. It is important to get the best merchant account to ensure the greatest success of your business venture.