Using Your First Merchant Account

Some people say they really feel like a business owner when they’ve gotten their loan to start a business, but others think that feeling comes from the first credit card swipe machine the company invests in. This is the point of no return for many, and a sign that the dream of starting a business is about to be put to the test.

Merchant services require some knowledge of contracts, but mostly you’ll need to have a strong grasp of your sales volume and where you plan to do business the most if you want to find a good one. Some accounts cater more to an online storefront, others to the brick and mortar, and a few offer good services for both on and offline sales. Read your contract carefully and look for the rate structure.

Your ideal rate structure is interchange plus. This model charges you based on the card used on your credit card machine, and offers variable rates to cover the costs. When customers use cards that have benefits, for instance, those benefits have to come out of someone’s pocket. Your fee for those cards is offset by sales volume, and cheaper cards (like debit cards that don’t offer cash back or mileage).

When you sign up, be sure to ask whether your merchant account supports an online storefront and if there are tools to implement that account online. Even if you don’t plan to use this immediately, it’s still important to know about if you ever make the decision to go online.

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