Just Open Your First Retail Business? Discover Your Payment Processing Options
Opening a retail business can be a daunting experience, but with the
right information, some hard work and careful planning, the risk can be
well worth it. If you’re just getting a new business on its feet or
you’re planning on expanding your current business’s capabilities, it’s a
good idea to have a firm understanding of all available payment
While in a perfect world, everyone would pay
for goods and services in cash, the truth is, credit and debit cards are
quickly becoming the most popular way people pay. In the modern era
where instant results are a way of life, consumers often take your
ability to accept credit cards for granted. If you are interested in
processing credit cards as payments, it may be time to set up retail merchant services.
merchant account is a special type of bank account that allows
businesses to accept credit cards, debit cards and in some cases,
e-checks, as payment. These accounts are offered by merchant banks,
which differ from regular investment banks in that they only accept
legitimate registered businesses as clients. You may set up a merchant
account either directly with the bank or through an official provider.
Merchant Account Providers
demand for merchant accounts is so high, and the risk sometimes great
as well, merchant banks do not handle all account set ups alone. Third
party contractors called independent sales organizations, or ISOs, act
as liaisons between banks and businesses, specializing in arranging and
providing merchant accounts.
One reason many new businesses
choose to set up merchant accounts with ISOs rather than banks directly
is that the vetting process merchant banks use can be quite rigorous.
Unless your business has excellent credit and a proven track record, an
ISO could be the best option for you. Fortunately, ISOs come with a
number of benefits as well that banks cannot offer.
offered by ISOs vary from company to company, but usually consist of
customer service, back office duties and settlement management. ISOs can
also lease or sell any necessary equipment, such as card swipe
terminals and paper supplies.
Of course, doing business with an
ISO also comes with a longer contract. Before choosing a solid ISO, it
makes sense to shop around and compare deals and to check credentials
scrupulously. An ISO in good standing will be able to produce evidence
of sponsorship by an FDIC-insured bank to insure you that you and your
customers’ transactions are secure.
Kinds of Merchant Accounts
accounts are available in several varieties, each suiting a particular
type of business operation. Depending on the kind of business you run,
you may opt for a single type or a combination of accounts. These
account types also come with corresponding levels of fees and charges,
so making the correct choice can be crucial to balancing your budget.
Retail Merchant Accounts
most of your business transactions take place from a storefront or
other physical point of sale, a retail merchant account is likely your
best bet for serving clients’ needs without breaking your own bank. This
type of merchant account requires that at least 80% of all credit card
sales take place with the card holder present.
accounts require the use of a credit card reader terminal. Processing
cards with a terminal connected to the Internet allows you to either
accept or decline a particular payment almost instantaneously. Such
terminals are also capable of accepting payments via manually entered
credit card information.
Since the instant processing of credit
cards is considered the most secure method, per transaction fees are
some of the lowest available for merchant accounts. The average rate
hovers near 1.85%.
Internet Merchant Accounts
merchant accounts allow businesses to process credit cards via a
web-based purchase. ISOs offering Internet merchant accounts usually
direct potential customers to a third party run virtual payment
terminal, which collects billing information and sends the payment to
the business’ account in about three days.
processing is considered to be riskier than instant processing done in
person. This means that rates are a bit higher so that ISOs can cover
MOTO Merchant Accounts
order/telephone order, or MOTO, merchant accounts allow businesses to
process credit cards remotely, by entering information manually via the
web or by telephone. These accounts are considered to be the riskiest
and come with hefty fees. They are also waning in popularity as
Internet-based purchases replace mail and phone purchases.
A merchant account
can be a boon to any retail business. More consumers rely on credit and
debit cards for payment than ever before and the ability to accept them
will likely increase business and help retain current customers. Take a
moment now to discover the merchant account that fits your business