Before You Open That New Business...

Oh the trials and travails of opening one's doors for the first time. It's a shame that something which holds so much joy and excitement of the freshness and fervor of hanging one's own shingle, can so quickly get mired down in headache and heartache. This entire blog could be dedicated to just this topic, but as I focus on merchant accounts, let's discuss how your business should accept credit cards.

Should you or shouldn't you?
Depends, how much business do you want? My grandmother always said that a business fights for too long and too hard to get each and every customer in the door that they do not want to turn away a single customer because they cannot take that form of payment. Nowadays a business that does not accept credit cards loses over half of its potential business. To have to carry cash, and as much as you need highly limits shoppers. You should give them every opportunity to buy from you.

Should I Buy Equipment?
If you are a retail location, of course not. At least not new. There are places where one can buy refurbished terminals for under a $100 and that fits just about any shoestring budget. As well, most companies will give you a terminal if you are going to do at least a $1,000 in credit card sales a month. If you are not at that level yet, buy a refurbished until you can do that much.

Upfront Fees
Anybody that tries to get you to pay a setup fee of any sort should be shown the door. All they are doing is putting a bonus in their pocket Read my post The Painful Truth. Do not fall for it. It's your business and they want it. Make them fight for it.

Checks
There are multiple ways to accept checks. One is to use Remote Deposit (See: What About Checks?) and the other is to use something such as Check Guarantee. Remote Deposit uses a machine through your computer to deposit checks directly to your checking account just as if you went to the bank, but offers no additional protection and they require a certain amount to be left in your business checking account. Check Guarantee (See: Safer Checks, Really?) offers just that and you get it through your merchant account. Like a credit card there is a percentage taken out, but if the check is accepted, you are guaranteed the funds and the check cannot bounce.

Fees, Percentages, and All that Jazz...
How much is too much? What is fair? Hard to say as this is a highly mercurial industry. However, at the time of this writing and assuming you sell very safe items (no pornography, diet pills, hair loss treatment, timeshares, male enhancements, yadda, yadda, yadda...), Retail should be around 1.77%. Card-Not-Present environments (such as over the phone/MOTO, or over the web/e-Commerce) should start around 2.1% and climb. Make sure to read What Fees are Inescapable and Everything Else.

What are the Hidden Things?
Well that's the real question, isn't it? There are several things that I could go on and on about, but here is where you need an advocate. An advocate represents you, speaks on your behalf, and should have your best interest at heart. My Dad always said 'Vote with you feet'. If your merchant rep does not have your best interest at heart, leave and get another one who will. A good example of this is the constant rate climb of your account and the management thereof. This is one of the biggest ways that businesses get taken to the cleaners. Read: Percentages Can Grow Overnight for a more complete discussion.

Another hidden little item is when your customer uses a Rewards Card at your business. They get the sky miles while you foot the bill.

The Wrap Up...
Most anything here quickly gets in depth. This article links to several more fulfilling, but by no means exhaustive, discussions. Read and be wise. Better yet, post a question if you are curious or contact me at willb@merchantconsulting.com and we will probe your ideas further.