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5 tips for selecting a merchant service provider

Posted by Alex Neir on Fri, February 08, 2013 @ 01:14 PM
Selecting a merchant service provider
Selecting a merchant service provider can be a daunting task. With so many companies claiming to be an expert in the industry, how do you make the right selection? Here are a few tips to guide you on your quest.

1. Ask as many questions as possible

In order to feel comfortable with the company you select you will need to ask a few questions. The more questions you ask the better feel you will get from the provider.

Here are a few questions to ask when selecting a merchant service provider:

    • What are interchange fees and how are they determined?
    • What price structure will be set up for my business?
    • What can I do to make sure my credit card sales qualify for the best rate?
    • How will my fees be deducted from my account?
    • If I need equipment will it be leased or do I have the option to purchase it?
    • Is your equipment proprietary?
    • What is the early termination fee?
    • Is there a monthly minimum fee associated with the account?
    • What is the annual fee for the account?
    • What is the PCI Compliance charge?
2. Avoid a processing account from the banks

Merchant services and credit card processing is a specialized industry. You wouldn’t go to your dentist to get gallbladder surgery would you? No, simply because your dentist specializes in a particular part of the body. The same is true of the banking industry. The banks specialty is storing and lending money, not processing credit card transactions. Go with a specialist and your experience will be much better.

3. Understand how the fees are calculated

Understanding the fees associated with the account is very important. The credit card processing industry has intentionally made fee calculation cumbersome so that merchants don’t understand what they are being charged. Avoid this issue by taking some time to understand how the fees are calculated. If the provider you are speaking with is unwilling to explain it, move on.

4. Avoid an account with a cap

If the processor you are working with has an account cap that can’t be exceeded, move on. Most provider will have soft limits set up on the account. The soft limit represents the boundaries the processing account is set up with. These limits can be exceeded, hence the name soft limit. If your account is not able to exceed these limits it can inhibit your business growth.

5. Ask more questions

The more questions you ask the better your experience will be. Make sure you ask about the processors better business bureau standings, ask about the history of the company and their merchant attrition rate.

These tips will help arm you with the best information so that you can make the right decision for your business.

Tags: Merchant Service Tips, Applying For a Merchant Account, Merchant Service Provider

6 Steps in Applying for a Merchant Account

Posted by Alex Neir on Wed, January 18, 2012 @ 02:09 PM
Applying for a Merchant Account

Are you considering applying for a merchant account? If the answer is yes then this post is for you. I will explain the process and give you specific direction on how to secure the very best rates available.

When applying for a merchant account there is a specific order in which you should approach the process. Below are the 6 steps when applying for a merchant account:

  1. Review the different pricing option available and understand how your business is affected by each
  2. Review some questions to ask when shopping for a merchant account
  3. Shop at least 3 different providers
  4. What to expect with the merchant account application
  5. What will be required for merchant account support documents
  6. Generally, how long do it take to set up a merchant account

A detailed understanding of the different merchant account pricing structures will help you when speaking to merchant service providers. Some providers will pitch you a pricing model that is more advantageous for them and one that is not the best fit for your business. Additionally, it is important to know how your business transactions affect your costs with respect to frequency and size.

When shopping for a provider it is helpful to know what to ask. We have compiled a set of questions that will get you headed in the right direction.

Always shop at least 3 providers. This will allow you to get a feel for multiple providers and will strengthen your chances of finding a good fit for your business.

Once you decide on a provider the next step is the application. The typical application is quick and easy to fill out. Most providers will gather the requirements on the phone and are able to consult you on ambiguous questions. Important pieces to pay attention to are the merchant account soft limits. You will want to make sure you give your account enough room to grow as the business expamds.

Along with the application you will be required to provide support materials related to the applicant and business applying for the account. A short list of support materials can be found here.

The length of time it takes to get an account set up depends upon your type of business, industry, requested volume and financials. The process can take from 24 hours up to 2 weeks.

If you found this post to be helpful and would like to inquire into and account with Maxx Merchants please give us your contact information and a representative will be in touch shortly.

Tags: Merchant Account Soft Limit, Applying For a Merchant Account, Support Documentation, Merchant Account Pricing

Merchant Account Support Documents – What’s Needed

Posted by Alex Neir on Thu, June 23, 2011 @ 07:43 AM
Merchant Account Support Documents

Merchant Account Support Documents – What’s Needed

When applying for a merchant account your business will be required to fill out a merchant account application. The application is typically standard across most merchant service providers with regard to the information collected on the application. Please NOTE: the terms can very greatly from provider to provider so be sure to read the service agreement that outlines the terms of service.

In addition to the application your business will be required to provide support materials as they relate to the business and owners. Required merchant account support documents are as follows:

  • Business organization documentation
    • Business articles of incorporation
    • Or Non-Profit documentation 
    • Or Sole Proprietor documentation 
  • Applicant(s) driver’s license
  • Voided business check
  • Business or applicant financial documentation
    • Previous processing statements
    • Or business banking statements
    • Or owner(s) personal banking statements

Business organization documentation

Organizational documentation is needed to ensure the business is organized in the US and is in good standing.

Applicant(s) driver’s license

A copy of the applicant(s) driver’s license in necessary to verify the information on the application has been recorded accurately and will be used to perform a credit check on all listed applicants. 

Voided business check

A copy of a voided business check is required to prove that the account associated to the merchant account has been established. This is the account that the funds received from credit card sales will be deposited into.

Business or Owner financial documentation

Financials are needed to illustrate the financial strength of the business and or applicants. Typically if the business has had a merchant account in the past all that needs to be provided are 3 of the most recent processing statements from the previous provider. If no previous merchant account is available, the next requirement would be the 3 most recent business bank statements. If the business is new and there is no banking history associated with the business then 3 of the most recent personal bank statements for the applicants will be required.

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Tags: Merchant Account Education, Applying For a Merchant Account, Support Documentation

Top 10 questions to ask when applying for a merchant account

Posted by Alex Neir on Thu, June 09, 2011 @ 07:24 AM
Applying for a merchant account
Top 10 questions to ask when applying for a merchant account

Applying for a merchant account can be a little overwhelming. You may feel that you don’t have enough experience or knowledge about the process to ask the right questions to avoid being over charged. We have created this useful guide to help you focus on the most important aspects of a merchant account as you compare providers.

What are interchange fees and how are they determined?

The bulk of the costs associated with a merchant account come from interchange fees. Interchange fees are charged from the credit card issuing bank and major associations (Visa, Master Card, Discover, etc) and represent the fixed cost that all processors are working off of. Understanding how interchange works will give you a fundamental understanding of how different price structures are setup.

What price structure will be set up for my business?

There are many different price structures that can be set up for any given business. Each one will interact with the interchange fees in a unique way. The three most popular pricing structures are:

With a tiered model the interchange fees are set at specific levels based on how the credit card being processed is qualified. The credit card processor’s mark up is built into the tier. ERR pricing sets the interchange fee at a specific level and charges a surcharge for any transaction that does not qualify. Interchange plus is the most transparent and passes the exact level of interchange directly through to the merchant’s bill. The credit card processor will add a markup on the merchant statement for the cost of the service they provide.

What can I do to make sure my credit card sales qualify for the best rate?

Remember that the bulk of your processing fee for each transaction is determined by the interchange rate the transaction qualifies for. Therefore it is very important to understand how to process your customer’s credit cards to ensure the lowest interchange fee is applied. Additionally, there is terminal software called BIN seeker that will automatically help route your transactions to the lowest level of interchange.

How will my fees be deducted from my account?

There are two settlement options that are offered by all processors. They are daily settlement and monthly settlement. With daily settlement you’re processing fee and per transaction fee will be deducted from each sale before it is deposited into your account. With monthly settlement each sale will be deposited into your account in full. Then at the end of the month the total fees for the month will be deducted from your account.

If I need equipment will it be leased or do I have the option to purchase it?

Never lease equipment. Terminal equipment can be purchased starting at $150. With a lease you will be locked into a very long term contract in which you will pay upwards of 1,500% or more of the actual cost of the equipment. Be very carful with processors that are pushing leased equipment as this is good signal that they don’t you have your interests in mind.

Is your equipment proprietary?

Proprietary equipment will only work with that specific processors network. Proprietary equipment makes it impossible for the terminal equipment to be re-programmed by another processor if your business decided to switch processors in the future. There are numerous manufactures that provide non-proprietary equipment that work will virtually all credit card processing networks. 

What is the early termination fee?

Most, if not all, credit card processors with have an early termination fee written into the terms of service. It is important to understand what that fee is as you compare providers. It is also important that know that the fee is negotiable.

Is there a monthly minimum fee associated with the account?

The monthly minimum fee is the minimum amount of fees that will be charged to the account over the course of the month. As the fees for the account begin to accumulate they are deducted from the minimum. So if you have a monthly minimum fee of $25 on the account and your total fees for the month are $16.57 the remaining amount of $8.43 would be applied to ensure you met the minimum. Monthly minimum fees are completely negotiable.

What is the annual fee for the account?

Most credit card processor’s will have an annual fee associated with the merchant account. This is another fee that can typically be negotiated so be sure to ask.

What is the PCI Compliance charge?

PCI DSS (Payment Card Industry Data Security Standards) compliance has to do with how your business handles credit card information from your customers. Identity theft has become an epidemic and the credit card associations are taking security of credit card information very seriously. Most all credit card processors will have a PCI Compliance check for businesses they provide service for. Most will also have an associated fee for ensuring compliance. This is another fee that can be negotiated.

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Tags: Interchange Fees, BIN Seeker, Applying For a Merchant Account, Credit Card Processing Fees, Monthly Minimum Fee