Accepting Credit Cards Introduction

The world of merchant account services can be confusing, especially for small business owners who have never accepted credit cards before.

I have even heard a merchant describe the process of getting set-up with a merchant account “nothing short of a nightmare and is not for the faint hearted” and then he continued to explain how it is one of the thorniest administrative challenges that most companies face.

I am here to help ease this process for you with a step by step process to getting set-up with Merchant Accounts.

Accepting Credit Cards

Accepting credit cards allow funds to be transferred to your business bank account in usually 24-48 hours on business days, (but some merchant accounts can have conditions on some accounts depending on your business model and type of services and may hold the funds for a week before releasing them to your account).

However, the norm is 1-2 business days for credit card sales to reach your business bank account and 24 hours for debit card sales to reach your business bank account.

If you are selling to consumers (B2C), accepting credit cards will allow you to grow your customer base, increase your sale amounts, & encourage impulse buying and obviously provide convenience to your customers then if you only offered check or cash.

Most retail businesses can not afford not to provide the option for customers to pay by debit and/or credit cards and if they do not risk losing sales/customers forever.

If your company is selling to other businesses (B2B) and is currently successfully invoicing your customers, you may be put off by the costs of accepting credit cards, which take a percentage of your sales (typical companies total costs after all fees are totaled can be 2-5% of sales).

However, your company can avoid loss of non-payment by having instantaneous approval on sales. In addition, you will no longer have to spend time issuing late invoices and waiting 30, 60, and 90 days before collecting on invoices.

Many B2B companies have moved to accepting credit cards only to stream line their invoicing and to improve cash flow in their businesses.

If your company is interested in selling over the Internet, accepting credit cards is a must and not doing so would be committing online suicide.

It is possible to accept credit cards over the Internet without establishing your own merchant account with a ‘Third Party Merchant Account’ like PayPal, 2CheckOut or more recently Google Checkout, etc.

These third party merchant account processors can accept credit cards on your behalf, without you or your business requiring a credit check, however this type of payment processing can have some serious disadvantages for your business.

They redirect your customers to their site to complete the transactions promoting their brand over yours. Third Party Processors typically batch your money into regular scheduled payments, resulting in cash flow issues. Their rates tend to be much higher then ‘true merchant accounts’.

In general, they can make your business seem like a small time operation. They are really only appropriate if you are testing out a business or only plan to make a few sales per month.

Most companies accept credit cards, although not ALL companies MUST accept credit cards. You know your business best. If you think it is more cost effective for your company and you know that your clientèle are stable, resulting in a very low non-payment, and you are not worried about cash flow then you may find it cheaper to just invoice your customers.

Read Part 2 : Type of Credit Card Processors