6 Simple Questions About Choosing The Right Merchant Account
In order to figure out which type of merchant account is best for your business, and which rates and fees will matter the most you, you must create a quick profile for your business. Answering these 6 simple questions can point you in the right direction:
1. How will I be processing credit card transactions? Envision how you see a transaction taking place - will you be accepting credit cards via your website and/or in a retail store? Perhaps you will require some degree of portability in order to process credit card transactions - in which case you may need a wireless merchant account.
2. Does my business have seasonal swings? If your business is dormant for certain months, you should try to have monthly fees such as the merchant account statement fee and monthly minimum fee lowered. You may need to give a little in other areas (like discount rate and transaction fee) but it will save you money in the long run.
3. What is my average dollar volume (or ticket size) of each sale? If you have a high dollar volume per sale, you should try to find the lowest discount rate possible, even if you have a higher transaction fee. If you have a smaller average ticket size, then the opposite is true - you are better off with a lower transaction fee and higher discount rate. To get a better understanding of these terms, click here.
4. What will my processing volume be? How many Visa and MasterCard transactions do you expect to process in a monthly period? If the transaction volume is higher, then monthly fees are less important to your business and you should focus on trying to get lower transaction and discount fees.
5. Does my business require multiple merchant accounts? If your business will be processing credit card transactions in different ways (i.e., retail businesses that also have an online presence), you may be better off having separate merchant accounts - often times you can work with your provider to have monthly fees lowered or even waived on one of the accounts.
6. Will my business benefit from the ability to accept credit cards? This is probably the most important - and overlooked - business profile question. Make sure to compare the cost of credit card processing to the expected increase in sales it will generate, and also look what your competitors are doing. Retail stores and e-commerce websites may not have much of a choice, but smaller businesses and niche business types need to give this question some serious thought.