Of all the elements of e-commerce, the internet merchant account remains the least understood and perhaps the most delicate component of building an online business. At the same time, there is a lot at stake in selecting a merchant account provider, and making a poor choice can result in numerous complications and unexpected log-terms costs. When it comes to accepting credit cards payments online, there is more that meets the eye-and it pays to understand the wider issues before committing with a provider.
Often, business people new to the Internet will focus on one merchant account issue-discount rate. The discount rate is the flat percentage taken from each credit card transaction by your merchant account provider. A reasonable rate is important. Unfortunately, many merchants never look beyond the discount rate to analyze other charges, fees and limits, nor do they reflect on issues like customer service, provider reputable, or how a provider performs risk assessment on your business.
With some providers offering shady solutions and many others pushing one-size-fits-all commodity merchant accounts, selecting the right provider-one that balances integrity and affordability- can be a daunting task. Complaints lodged against merchant account providers all have a familiar ring: sudden rate increases, long-term lock-in contracts, undisclosed fees and add-on charges, high monthly minimums, heavy rolling chargeback reserves, punishing chargeback fees, and surprise limits imposed upon your monthly revenue intake. A common adjunct to these problems is, quite logically, the inability to contact a customer service department when limits or complications grind business to a halt.
Ultra-low rates rarely equate with merchant friendly policies. Rather, scrutinize such rates critically and look at the total picture-from chargeback policies to monthly minimums to transaction fees. Look for hidden costs in the small print and look for ways a provider can ‘pad your bill’ with add-on fraud protection charges or ‘gateway’ fees. And make sure their structure corresponds comfortably with your business model and pricing strategy. Overnight approval, unsolicited e-mails ads and greedy pop-up application forms should also serve as warning signals.