Merchant Account Providers may offer a wide variety of equipment and services or a more selective array. They also price their offerings differently, which can make it a challenge to compare. What you should look for depends on your needs.
What Can a Merchant Account Do?
The ideal merchant account allows a retailer or etailer to accept credit cards, debit cards, and possibly gift cards or other payment forms from their customers, in addition to cash and checks. This service includes a software and/or hardware solution for processing these payments, and a wide variety of peripheral devices and services may also be available. While it is beneficial and desirable for storefront merchants to accept cashless transactions, it is widely considered critical to the survival of ecommerce establishments.
Key Products and Services
The services that are most critical to review are the merchant account, payment gateway, and the choice (if there is one) of virtual terminal – either using a PC or Macintosh computer or a mobile device – and point of service (POS) credit card swiper, with ability to accept VISA, Master Card, American Express, Discover, and debit cards. Other oft-used features to check for include eCheck service, eCommerce shopping cart, recurrent billing capability, fraud protection, and check swipers.
Be aware that some merchant account providers may provide service only with POS terminals, while others may only service online businesses, and only deal with virtual terminals. Some have both, but have limited (or only) POS terminal to choose from.
Other Elements to Review
Support is a critical element for everyone seeking a merchant account provider. It’s important to check both the support hours and the means of access, which might be via a toll-free phone number, email, or online LiveChat. Some merchant account providers offer a premium support service for a fee, so make sure you’re clear on what is included in the “basic” account, and what you have to pay extra for.
Check to see which payment gateway they are affiliated with. Some merchant account providers are affiliated with only one payment gateway (often Authorize), but some have a range of choices, with National Bankcard listing five, the most of the services surveyed.
You should also check to see the provider’s customer approval rating, what drawbacks existing customers have pointed out, how long it will take for your account to clear (the time can range from next day up to 4 days), whether the merchant account provider accepts digital applications, and the set-up time. If you are planning to use the shopping cart provided, make sure it has the flexibility it needs. Try calling customer service, and see what kind of response you get. Determine whether and, if so, what length of a contract is required.
If all of these meet your requirements, then it is worth moving on to investigate the merchant account provider’s fees and rates.
Fees and Rates
Some merchant account providers charge account start-up fees as high as ~$200, while others do not charge for set-up.
Monthly fees are often based on whether the credit card is swiped or keyed in, and there may be a monthly gateway fee (if it applies) and a statement fee, with a minimum monthly fee required. In a survey of merchant account providers, the monthly gateway fee ranged from $5.00 to $24.95, the monthly statement fee ranged from $5.00 to $10.00, and the monthly minimum fee ranged from $15.00 to $25.00.
Transactions with a card present are less risky, so cost less, and these two circumstances provide the basis for transaction fee costs. There are typically three different types of transaction fees: the averaged discount rate (with and without card present); the transaction fee (with and without card present); and the address verification fee.
The average discount rate ranges from .38% to 2.36% with the card present and from .89% to 2.36% for card not present, with the same merchant account provider providing the high for both. But notice that the lowest rate is 2 and a third times higher for card not present transactions, and this is more representative of the difference between the two types of average discount rate charges.
The transaction fee ranges from $0.10 to $0.30 with the card present and the range for card not present is the same, but a third of merchant account providers charge more for card not present, though one actually charges $0.05 more per transaction for card present.
The Address Verification Fee, which is waived by many merchant account providers, is $0.05 for half of those who charge, and $0.10 for 5 percent.
Historically, merchant account providers have set their average discount rate and transaction fee (and sometimes their monthly fees) based on the monthly sales. Check prospective providers’ sites thoroughly so that you understand all the factors that affect their rates.