If you run a business and would like to accept credit cards with a merchant account, you are probably wondering where you should begin. Accepting credit cards makes your life easier in many ways and helps increase your profitability. You attract more customers and increase the number of sales you make each month, which boosts your profit margins and empowers you to expand your reach.
Before you create a merchant account, you need to keep some factors in mind and have a clear vision of what you want to achieve. This guide explains how to create a merchant account and everything else you need to know to begin.
Benefits of Accepting Credit Cards
Review the benefits of letting your customers pay with credit cards:
- Increased Sales
- Increased Profit
- Decreased Paperwork
More people are using credit or debit cards because they don’t like having cash on them when they go shopping. Since many people don’t even carry much cash, not accepting credit and debit card payments instantly turns a lot of customers away. You lose a lot of people who would otherwise shop at your business. On the other hand, accepting credit cards makes it easy for many more people to spend money on your products or services.
Another benefit is that accepting credit and debit cards decreases the amount of paperwork you must do each month. When you accept cash payments, you have to save receipts and add up how much you earn. Many credit card processors automatically track that information to save you time and energy.
Factors to Consider Before Setting up an Account
Consider a few essential factors before you set up a merchant account, and you will be glad you did. You need to decide what credit cards you want to accept before you begin. Also, try determining the percentage of your sales volume that will come from credit card sales if you want to make the best choice for your business.
Whether you would like to accept recurring payments is another factor you should keep in mind when choosing your merchant account provider. This guide covers those factors and additional things that play a role in the path you take, allowing you to move forward with confidence.
Credit Cards to Accept
Not all merchant providers accept every credit card in the world, so the types you plan to accept are important. Make sure the merchant you sigh up with accepts all the credit cards you have in mind so that you don’t run into problems in the future. Virtually all payment processors accept Mastercard and Visa, so you will already appeal to most of the population.
But don’t forget that some people still use Discover and American Express. If your business has a global reach, research the most popular credit cards for each region in which you operate. Doing so ensures that you can accept payments from as many customers as possible.
Consider Your Credit Card Sales Volume
Think about the number of your sales that you expect to come from credit card payments. In most cases, around 75% of customers pay with a credit or debit card, but that still leaves 25% of people who pay with cash, checks, and money orders. Talk to the merchant providers you have in mind and let them know if you want to accept only credit cards. Some merchant providers want you to send all your payments through them for processing, and doing so could make your life a bit easier. You won’t have to go through more than one bank to add up your sales and profits.
Consider Whether You Process Recurring Payments
Many businesses only charge their customers each time they come to their shop or buy something online, which could be the right path for you. On the other hand, you might consider setting up recurring payments if you sell products your customers use all the time.
One benefit of recurring payments is that customers are much less likely to cancel or go to the competition. Recurring payments even benefit your customers by adding a level of convenience. Speaking with potential merchant providers to learn whether they accept recurring payments saves you a lot of trouble down the road, and you could set up recurring payments in case you want to accept them in the future.
Merchant Account Transaction Fees
All merchant providers charge transaction fees in exchange for processing your credit card payments. Do some research to find a provider that offers the best rates for your business, and you will be pleased with the outcome. Small transaction fees won’t seem like much at first glance but can add up over time, so explore the most common types.
Many merchant banks charge a commission for each transaction you earn. Depending on the bank you use, you will likely have a commission tier that determines how much you will pay. Your bank might use a tier system that considers the amount of each transaction, or it could look at the number of credit card transactions you process in a given period.
With flat-rate pricing, you pay a set fee for each transaction no matter the amount. Some banks, though, also use tier pricing for flat-rate fees. For example, you might have to pay $5 for transactions of up to $100 and $6 for transactions between $100 and $200. These are just examples, so speak with your merchant provider to learn everything about your fee structure.
In addition to transaction fees, ask potential merchant providers if they have any other service charges or fees you need to consider. You want to know how much you will pay for this service so that you can decide how it impacts your profitability. Some banks and merchant providers charge monthly or annual fees, and you might even need to pay maintenance fees. Ask whether your bank charges you if a customer does a chargeback. In most cases, you must pay a setup fee when you first create your account.
You have done your homework and are ready to choose a merchant provider that meets your needs better than the rest. Before you begin, your provider should tell you all the information you need to have on hand to create your account. You will need transaction statements and your business model because your merchant provider wants to know your business is legitimate.
If you run a small business, you will likely need to provide personal information about yourself and pass a credit check. The process can take a while and seem stressful if you have never done it, but you will soon be accepting credit and debit card payments so that you can grow your business.
You have many things to consider when choosing a merchant account to accept credit and debit cards. This process might seem daunting when you learn how many factors you have to consider, but do your best to keep your long-term goals in mind. It will be worth it once you reach the destination you had in mind from the start. Knowing whether you plan to grow your business or if you will accept recurring payments is a vital part of the puzzle that affects the path you choose.
You should not have much trouble moving forward if you know the direction of your business and what you wish to do. If you organize your goals and keep these facts in mind, you can choose a merchant provider and begin growing your profitability sooner than you once thought possible.