Choosing a Merchant Account Provider

So Many Banks, So Little Time

Merchant Account Provider Zoo

The selection of merchant account providers available to merchants these days is mind boggling. To help you sort through the pile, I'm going to list some examples of merchant banks as well as discuss the process of choosing a merchant account provider, including questions you should ask prior to selecting your merchant processor.

Things to Look for in a Merchant Account Provider

Each merchant bank has a different fee structure, which generally includes monthly and transaction fees. While merchant banks with low fees are attractive, they are not necessarily the best. Ask for a sample contract and compare the terms and rates among those offered by different merchant banks - this will give you negotiating power. Here are some things to look for in a merchant account provider:

Fee Structure

• Discount Fees : These are charged as a percentage of your sale, and should not exceed 2.25% and $0.30 per transaction. Keep in mind that these fees may differ for different types of credit cards (ie. Visa, MasterCard, etc.).
• Monthly Minimums : There should be no monthly minimum.
• Monthly Statement Fees : A monthly statement fee should not exceed $25.

Turnaround Time

• Deposits to Your Account : The time between a sale and deposit of proceeds in your bank account should not exceed 72 hours. This turnaround time is typically best when your merchant account is provided by your business bank.

Customer Service

A typical merchant account application will ask that the following are in place:

• The domain is registered to the account holder.
• An SSL (security) certificate is in place.
• They may ask for a copy of the homepage and one or two product pages.

Favorable Terms

• Length of contract - especially if you are new to the business, you do not want to get locked in to terms that you later discover are unfavorable.
• Bank reputation - Customer service and support, hours of operation, length of time in business, and alternative payment processing options in the event of a system failure are all factors that determine a merchant bank's reputation.

Where to Look for Your Merchant Account Provider

Here is a short list of places to begin your search for a reliable merchant bank:

• Your own bank - ie. where you have your business banking account. This is often a convenient option since you are already doing business with them and are familiar with their quality of service. Also, the turnover time between the transaction and the day your money is deposited into your account is typically at a minimum since your business account and merchant account are hosted by the same entity.
• Business and trade associations - associations in your industry will often have negotiated discounted merchant processing rates.
• Referrals - check with your colleagues and co-workers, maybe even your competitors, and see who they use.

Examples of Merchant Account Providers

• Bank of America
• Electronic Clearing House
• First Data
• Advanced Credit Systems