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Choosing a Merchant Services Provider

Written by Trent Brownrigg  · September 26, 2011

Accepting credit cards isn’t a do-it-yourself project. It requires a credit card processor (also called a merchant services provider) who establishes and administers your merchant account. During a transaction, the processor also acts as a middleman between the merchant and the credit card issuer to make sure the process goes smoothly.

Choosing the right merchant services provider requires an understanding of your credit card processing requirements and research into the various deals that are available. Here are five steps you should take when making your decision:

1) Learn about merchant accounts and the associated fees. You must establish a merchant account before you can accept credit cards. Basically, a merchant account is a bank account that acts as the depository for credit card transaction revenue. Once your merchant services provider has processed your transactions, it deposits the proceeds into your merchant account. The provider charges fees for its services — ask about them upfront and make sure you understand them.

2) Consider your technical requirements. What types of credit card processing are you planning to do? Traditional point-of-sale (POS) at a credit card terminal? Online processing from your website through an electronic gateway? Mobile or wireless processing when your business takes you on the road? Mail order/telephone order (MOTO)? Are most of your transactions card present or card not present? What business expansion or diversification plans do you have for the near future? It could be you need one or more credit card processing options, and you should make that clear to the merchant services providers that you are considering so they can come up with the best package deal for your needs and budget.

3) Identify merchant services providers who want your business. Not all processors work with all businesses. Some don’t deal with start-up operations or merchants with bad credit histories. Many will not service so-called “high risk” businesses, a category that includes adult-related businesses, online casinos and businesses located outside the United States. Look for a reputable processor who deals with businesses similar to yours.

4) Compare fees and services. Once you’ve compiled a list of potential merchant services providers, compare their fees and services to see who comes closest to meeting you requirements. Ask detailed questions about the types of hardware and software each offers. If you’re in the market to change processors, determine if your current system is compatible with their technology. When it comes to fees, going with the cheapest may not be your best bet. Be sure you know what you’re getting for your money, that it fulfills your needs and fits your budget.

5) Scrutinize security. Solid, reliable security may be the only thing standing between your business and disaster. It’s no secret that credit card fraud and identity theft are major threats to merchants and consumers alike. Make sure your credit card processing takes security seriously and is PCI compliant. Your merchant services provider should be able to answer all your security-related questions and train you and your staff in the proper protocols to keep you and your customers safe from a data breach.

Guest post by Marc McDermott, the Online Marketing Manager at Merchant Express, a full-service merchant services provider that has helped thousands of businesses with their credit card processing needs since 1998.


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