Accept Debit and Credit Card Payments for Your Small Business With a Merchant Account

A merchant account is a special type of business bank account that allows your business accept different types of payment, typically debit and credit card payments.

It’s how small and large businesses accept payments from their customers, whether online or in person. If you’re ready to begin accepting credit cards, read on to learn how to prepare and open up your own business merchant account.

When it comes to merchant accounts for small businesses, there are generally two ways to get a merchant account and both require that you enter into an agreement:

Option #1: Enter into an agreement with a member bank that has a processing relationship with a credit card company, like Visa and Mastercard.

Option #2: Enter into an agreement with an authorized agent of the member bank, such as an independent sales organization or member service provider (ISO/MSP).

This agreement means that your business agrees to abide by the operating regulations established by the merchant account provider. Before you take this step, though, you’ll need to know which options, fee structures, and features you’ll want for your business. 

This post walks you through the 5 steps of figuring that out for a new business merchant account, including how to: 

  • Consider your business needs
  • Compare merchant account provider fees 
  • Evaluate other benefits and features beyond credit card acceptance
  • Apply for a merchant account with your chosen provider

75% of consumers prefer to pay with credit or debit cards

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Step 1: Consider All Credit Card Payment Needs Within Your Business

Before you set up a merchant account, it’s important to think about how you want credit card payments to work for your business. Some key questions to consider include:

  • What types of credit card brands do you want to accept? Visa and Mastercard are standard, but is it important for your business to accept other card brands, such as American Express? Prepare a list of credit card brands that you want to accept before reviewing providers.
  • How do you want to accept payments?  Do you want your customers to make payments on your website? Do you need to process payments on your mobile phone? Do you want to use a virtual terminal, or is it easier for your business to use an API to integrate into your existing systems to run payments? Do you have recurring billing needs? Make sure you’re prepared with the primary way you’ll need to accept payments, along with all the secondary methods.
  • How much of your sales volume will be through credit cards? Will you still accept other payment methods, or will you be switching to solely accepting credit cards? It’s important to have some idea about volume before you talk with a merchant account provider.

To learn more about these topics you can read our post that provides answers to frequently-asked questions about merchant accounts

Step 2: Compare Merchant Account Provider Fees

Now that you have an idea of your business needs, it’s time to compare merchant accounts for small businesses. And when it comes to comparisons, a provider’s fees and pricing structure will be one of the first considerations for a small business owner.

Transaction Fees

There are two common types of merchant account transaction fees for credit cards transactions:

  • A flat rate you get charged for each processed credit card payment 
  • A percentage fee based on the total amount of each transaction

Further, for the percentage fee, many merchant account providers use a tiered pricing system based on a number of variables that may include:

  • How you accept the payment vs. the primary way your merchant account is set up to accept payment
  • If the customer’s card is a rewards card
  • If their card is present or not
  • The volume of payments your business processes

This topic can get complicated, but we have a full guide to the different types of credit card merchant fees here. We encourage you to review that post to learn more about how fees are calculated.

*Tip: To get a clear picture of what you will likely be paying in fees, gather all the rate details first and then do some rough calculations with ~50% of your transactions falling into the higher tiers.

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Other Merchant Account Fees

There can be other fees associated with a merchant account beyond the transactional fees. Other fees to ask a provider about include:

    • Monthly minimum fees
    • Setup fees
    • Cancellation fees
    • Statement fees
    • Customer service fees
    • Chargeback fees
    • Batch fees
    • Annual fees

Clearly review all of the fine print about these fees up front, and ask questions, so you don’t encounter surprise costs along the way.

Step 3: Evaluate Merchant Account Providers Beyond the Fees

Not all merchant accounts are created equal, so getting a holistic view upfront will be critical to your satisfaction and long-term success with your merchant account provider.

Consider the following factors.

Is your customer’s payment data stored securely? This is critical nowadays. Look for a provider that complies with all PCI requirements for small businesses. Read more about those here.

No business needs the headache of an in-depth PCI compliance review, yet you must provide your customers with the best possible and secure payment experience.
Integrated Features
Does the merchant account provider offer all of the software and payment acceptance options your business needs, or will you have to supplement with other providers (and potentially incur additional fees)?

For example, are
virtual terminal processing, email invoicing, recurring billing, website payments, and mobile payments included in the solution, or do you have to set these up separately? The more providers you need, the more costly and complicated your experience will be.

How much control over your customer’s payment experience will you have? Many business owners don’t have the time or expertise to set up customized online solutions, so finding something that is automated and hosted by your solution provider is critical. 

However, in order to provide a good experience to your customers, you’ll need to easily customize any invoices, payment forms, and payment communications. Find an option with a good balance.

Ease of use
Is the solution tailored to your type of business and easy for you and any employees to use? Does the merchant account provider frequently work with your business industry and size?

Finding a provider that is dedicated to your business type means that their future developments will continue to match your needs.

Great customer support
Exceptional customer support can be difficult to come by, but it should be a requirement for your business. To help you succeed, look for a customer support offering like PaySimple that includes phone, email, chat and help center access.

Further, are they willing to provide you with references or case studies? Learning about other businesses’ experiences with a merchant account provider can be very insightful during your selection process. You can learn more in our longer post on this topic below.

>> Supporting Post: How to Select a Merchant Services Provider for Your Business

Step 4: Apply for A Credit Card Merchant Account

Since the provider takes on risk by processing credit cards on your behalf, your business will likely go through a comprehensive review process before approval.

The merchant account provider will require you to complete an in-depth application before reviewing your business model, finances, and more. If you are a smaller business, you may also need to provide personal information, undergo a credit check, and provide a personal guarantee on the account. 

It’s best to work with a provider with a stellar customer service team who will guide you through underwriting to ensure the fastest and least confusing approval process. A team member should always be available to answer any questions that come up. 

Our post on the merchant account underwriting process covers everything you can expect, including the type of paperwork involved and how long the process takes. 

>> Supporting Post: 10 Things You Should Know About Opening A Merchant Bank Account

Step 5: Accept Credit Card Payments

The good news is that all of that work you and the merchant account provider did in the set-up process, will now pay off.

Once your merchant account is set up, your business can start accepting credit card payments. If you’ve gone with a great merchant account provider, this can be as simple as logging into their software or app, entering your customer’s payment information, and clicking the collect payment button to have the transaction processed and funds deposited into your bank account.

If your business is ready to get started with a merchant account, PaySimple can help. Reach out to our team today at  800-466-0992

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