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When you own a business, one of the things you think about constantly is cashflow – specifically, how your actions might be affecting it. And, many business owners are right to be worried about cashflow. When you accept credit and debit cards, you’re removing much of the resistance to doing business with you. But, you might not be getting a great deal for yourself. Here’s how you should be choosing your next merchant account provider and make offering plastic a win-win proposition.
“What’s your customer service look like?”
Customer service is important. If you can’t get a hold of someone when you have a problem, then the service is useless. But, many business owners don’t give this much thought. They’re lured in by low fees and forget to check whether the service provider even has a phone number.
Surprisingly, many of the big-name companies out there don’t, and some, like Stripe, even tell you outright that they believe email and tweeting is their preferred method.
Other companies make it difficult to access quality customer service. This is no good when you need service right now and can’t wait for an email.
“How much do you charge?”
A lot of what drives business decisions is cost. And, while you shouldn’t overpay for merchant services, what constitutes “overpayment” can be somewhat difficult to figure out. The industry standard for direct merchant services is the Interchange rate plus a flat per-transaction fee.
This is usually also combined with a monthly service fee and monthly minimum transaction volume.
For third party merchant account service providers, like PayPal, Stripe, and others, the standard structure is a percentage of the transaction, usually 3-4% plus a flat per-transaction fee.
You should check this website for a comparative analysis of various direct merchant account services.
The general rule of thumb is that you will pay more for third-party service providers, but you will often have less work to do in terms of compliance. With direct service providers, you pay less, but only if you have higher transaction volume. You also typically have to manage compliance yourself, which adds to the expense.
“How long have you been in business?”
Knowing how long a company has been in business doesn’t always tell you how your experience with them will be. But, it does indicate that they’ve managed to do something right, since they’re still around.
At the same time, don’t be afraid of upstarts. New companies often bring a lot to the table, including the possibility of a revolutionary business model. An example of this would be Braintree, which was eventually bought out by PayPal, and which later heavily influenced the parent company’s payment processing methods for the better.
“Can I process transactions online?”
Believe it or not, some merchant account providers won’t allow online transactions, or charge a much higher fee for them. If you run an online business, always ask about rates for Internet sales, and compare them against other service providers that specialize in online sales.
“Are you PCI compliant? Will I be PCI compliant?”
This is a relatively obscure part of the industry, even though MasterCard and Visa strictly enforce their compliance standards. Every merchant that collects credit card information must maintain PCI compliance. If your provider is compliant, don’t’ assume you are too. Merchants must self-certify unless the merchant account provider can verify that they are handling 100 per cent of PCI compliance for you.
Jay Chadwick has plenty of retail consultancy experience and enjoys the challenge of finding ways to streamline and improve performance and profitability. He likes to share his insights with an online audience and is a regular contributor for a number of retailing and B2B websites.
