What a processor will want to know when you want to get merchant account credit card services: 1) What is your average sale going to be? Do you have a focused product line or set of services that have certain price ranges? Have you done your homework and have a good estimate of what 80% of your customers will do when purchase your particular product or service? The larger the average sale, then the larger the risk will be for fraud from customers, employees or merchants (Sorry, there are business owners who don't do things properly like you will).
Let's say that your average sale is $2000 for fitness equipment, and Bob owns a pizzeria with $8 average sales. And you both have a monthly volume of $20,000. The best scenario for both of you would be: you pay a higher percentage, but have less trans- actions, so will have low transaction fees. Bob will get a lower percentage, but will pay each time a transaction occurs and that adds up. Everyone is different.
What ties into this point and flows into the next is that low average sales will have higher percentages of people paying by debit or cash- concentrate on transaction fees.
High average sales will have higher credit card volume compared to debit or cash- concentrate on rates.
2) What is your monthly credit card volume going to be? Let's say that, according to your business plan, your estimated volume is going to be $10 000/mth. A few things to help you estimate, and therefore know what ballpark you will be for total fees is: Visa is used 2-3 times more than Master Card. So you might not mind a higher Master card rate.
Depending on the type of products/ services that you provide and your business' average sale amount, debit can be as low as 20% of your business volume and as high as 60%. So you might not mind higher credit card rates if you have high debit usage. Depending on what you provide and your average sale amount, your credit card volume may be as low as 20% and as high as 80% of your total estimated monthly volume of $10 000.
3) what percentage of your business will be face to face with your customers? 100%? 50%? 10%? This will make a difference in the rates that you will get. General rule: if your business model has more face to face customers that will be swiping their cards on your terminal, then this will be less costly than if the opposite were true.
What you will want to know when you want to get merchant account credit card services:
1) What are my total fees going to be? If who you are dealing with is not upfront from the start, then you will know what to expect. Do they dodge your questions? Or simply ignore them? Run away!
2) What are the warranties covering and for how long? Do they charge 'forever rent' monthly rental fees for the life of your business? If not, then do they only have a legal one year manufacturer's warranty? Now you know why it's 30% cheaper than the competition in the hardware. What happens when the terminal breaks? Are there loaner units until mine get fixed, or do I have to ship it to the states and get weeks of downtime? Do I have to pay for an extended warranty or is it included in the price already?
3) What kind of live support is available for my terminal? Is it fully staffed or a maze of complex audio FAQS and automated directories of voicmail boxes. Are there 45 minute wait times of less than 5mins? Can the live support people help me right away or do I have to go through some lengthy protocol to finally be able to ask questions?
Other considerations:
1) What are your profit margins? How low or high are they going to be?
2) How much more in sales volume will accepting debit bring you?
3) How much more in sales volume will accepting credit cards bring you?
Once you know the estimates of these answers you will know whether to get merchant account credit card services now, or just when you reach a certain mile marker in your business volume.
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Contributor's Note
I recently posted a longer version of this on my payment processing blog.
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This intel first appeared on: http://www.canadapaymentprocessing.com/get-merchant-account-credit-...
