Top 10 Mistakes to Avoid When Choosing                         a Merchant Account ProviderChoosing the right merchant acco...
into another charge, or other charges may have been bumped up a notch to make up for the“free” item.Mistake #3: Assume all...
and fees change without advance notice? How soon will you have access to your funds after atransaction? What is their poli...
that can bring in more money than it pulls out, making it an excellent investment in yourbusiness’ future. When you calcul...
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The Top Mistakes to Avoid When Choosing a Merchant Provider


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A top priority for all businesses should be selecting the right merchant account provider for their credit card processing needs. Doing so involves research and a process of elimination. To avoid mistakes, Merchant Express covers some issues that you should keep in mind during the process in this whitepaper.

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The Top Mistakes to Avoid When Choosing a Merchant Provider

  1. 1. Top 10 Mistakes to Avoid When Choosing a Merchant Account ProviderChoosing the right merchant account provider for your credit card processing needs should be atop priority for all business owners. Unfortunately, merchants are often intimidated by theprocess and afraid of making a mistake.An important decision like choosing a merchant account provider should involve doing researchinto available options, asking for recommendations from other merchants, identifying likelycandidates, a careful comparison of products and services, and a final decision based on anumber of important factors, including the provider’s experience and reputation, the packagethey’re offering and how well it meets your requirements and — of course — cost.One thing is certain: There are plenty of merchant account providers out there from which tochoose, and they all advertise that their deal is “the best”. But best for whom?Credit card processing is not a one-size-fits-all proposition. Consequently, merchants need totake the time to analyze their needs and outline them clearly and honestly to a potentialprovider, who must then tailor a package of products and services to meet those requirements.To ensure that the whole process goes smoothly from start to finish, consider the following Top10 Mistakes to Avoid When Choosing a Merchant Account Provider:Mistake #1: Go with the first provider you meet. Is that any way to create a business alliance?Because that’s what a merchant account provider is — an ally in your business who will beheavily involved on the financial side of your operation. That’s why it’s important to choose areputable provider with a proven track record. Do initial research online, in the Yellow Pages orthrough local business associations. Ask other merchants if they’re happy (or not) with theirprovider. Collect names and data for your short list of candidates, then check out each potentialprovider with the Better Business Bureau, or type their name into a search engine and see whatpops up. Trust your gut — if you don’t like what you see or hear, move on to the next name onyour list.Mistake #2: Believe that “free” actually means free. You will see a lot of merchant accountproviders advertising “free merchant accounts”, “free terminals”, “free processing” or “freeInternet gateway”. When it comes to the word “free”, the devil is usually in the details (i.e. thefine print at the bottom of the page or contract.) Question any and all “free” claims with theprovider. An offer for a free trial is worth investigating, but make sure you understand all theterms of the deal before signing up. And keep in mind that just because no charge for a productor service appears on your statement, it may not be truly free. The cost may have been folded
  2. 2. into another charge, or other charges may have been bumped up a notch to make up for the“free” item.Mistake #3: Assume all fees are valid and applicable to you. As you talk to merchant accountproviders, you’ll discover that there are many different fees and rates associated with creditcard processing. Some, like interchange, transaction, batch processing, monthly statement andchargeback fees, are standard in the industry and all merchants pay them. Then there are theso-called “junk fees”. Typically these include charges like file fee, security fee, audit fee,conversion fee, over-limit fee, excessive transactions fees and billback fees. If any of theseappear in your contract, ask that they be removed or they’ll show up on your monthly bill.Additionally, once you’ve signed on with a merchant account provider, be sure to check yourstatement each month to make sure you’re not charged for services or products you’re notusing. For example, if you process via the Internet and you see a charge for dialup service,question it.Mistake #4: Hold back information from the provider about your business and future plans.There’s something to be said for playing your cards close to your vest, but in this case it couldend up costing you money in the long run. In order to make you the best possible credit cardprocessing deal, a provider must have an excellent understanding of all facets of youroperation. If you’re currently running a traditional retail business from a storefront but expectto expand onto the Internet, let the provider know so they can include the necessary productsand services in their proposal. Businesses with a mobile workforce can benefit operationallyand financially from mobile or wireless credit card processing, but not if the owner doesn’tshare that information with the provider. Again, the merchant account provider is an ally inyour business and wants it to be competitive and successful. Help them do their job by beingupfront about your plans.Mistake #5: Be less than truthful on your merchant account application. The provider willrequest specific information about you, your business and your personal finances on yourapplication for a merchant account. In addition to contact, banking and tax information, you arealso required to provide information about the type of business you operate, your processingvolume and average sales amount. Merchants who are currently accepting credit cards areusually asked for several recent statements from their provider. A personal guarantee andcopies of your articles of incorporation and business license or permit are also requested.Merchants who misrepresent their business or tamper with their financial information are likelyto be caught and rejected by the provider.Mistake #6: Don’t ask specific questions about the financial side of the process. Imagine notasking about what your monthly payment will be or when the proceeds from your credit cardtransactions will be deposited into your bank account! You have a right to know upfront exactlywhat your financial obligations to the processor are, and vice versa. For example, will your rates
  3. 3. and fees change without advance notice? How soon will you have access to your funds after atransaction? What is their policy on chargebacks? How much will it cost to modify your packageof services if your requirements change? These are all honest questions that deserve honestanswers from a potential processor.Mistake #7: Reject any fraud protection programs that are offered. Fraud and identity theftalways happen to the “other” guy, right? Wrong! Credit card fraud can — and does — happento merchants of all sizes. In fact, there’s evidence that cyberthieves, scammers and fraudstersspecifically target small to medium-sized merchants most often because they’re considered“soft” and vulnerable to a blitz attack. Achieving and maintaining PCI compliance is just the firststep in the process of keeping your sensitive information and that of your customers secure. Areputable merchant account provider will assist in PCI compliance and offer a data breachsecurity program that helps offset potentially huge expenses following a suspected or actualbreach of payment card data.Mistake #8: Wait until the last possible minute to set up your merchant account. Applying forand getting approved and set up with a merchant account doesn’t take a lot of time if you arewell qualified and prepared to provide all the necessary information. A reputable merchantaccount provider can usually approve and equip you within a few days. However,procrastination will work against you if you put off the process until just before you need tostart accepting credit cards. Credit cards are important to your business, so put your merchantaccount at the top of your “to do” list and make it one of your first priorities.Mistake #9: Don’t bother to read the contract. You’ve already gone over the details of thedeal with your sales rep, so why waste your valuable time on the fine print? The best answer tothat question is: Protection. You are about to sign a legal document establishing a long-termrelationship with this merchant account provider, so you want to be 100 percent sure of what isrequired of both parties. Reviewing the contract — possibly with a legal or business advisor —is the last step in the selection process, and your last opportunity to make sure the deal youagreed to is the deal you are getting. Ask for your own copy of the contract as well as theprovider’s terms and conditions or service agreement — and then read them all!Mistake #10: Deciding that you don’t need to accept credit cards after all. This is perhaps thebiggest mistake a merchant can make. The potential advantages of accepting credit cards arenumerous: Increased customer convenience and satisfaction contributing to customer loyaltyand good “buzz”, improved branding for your business that makes you more competitive inyour marketplace, higher customer conversion rates, increased customer spending, no morebounced checks or collections, guaranteed and timely settlement with payment directly intoyour bank account, new options for growing your business (Internet, mobile and wireless creditcard processing) and fewer trips to the bank to deposit cash and checks. At first blush, creditcard processing may seem like an expensive proposition. In actuality it’s a business expense
  4. 4. that can bring in more money than it pulls out, making it an excellent investment in yourbusiness’ future. When you calculate the time and effort credit card processing saves you, itmay well turn out to be the most cost-effective payment option of all.