10 Things to Know When Opening a New Merchant Account
A merchant account is a mission-critical piece of the payments puzzle for most full-time business owners doing any kind of significant sales volume. But for new and experienced merchants alike, the process of getting set up with a new account can seem opaque and even difficult. Independent sales organizations (ISO) – sales companies that work with multiple payment processors – can represent a great way to access merchant services without having to worry about the minutiae. Regardless, whether you choose to work with an ISO or apply directly to a processor, the following are ten things to keep in mind to make shopping for a new merchant account as easy and stress-free as possible.
1) Not All Merchant Accounts Charge the Same Fees
It’s easy to assume that payment processing is fungible and processors act like your local gas stations, all charging more or less the same fees to stay competitive with each other. But that couldn’t be further from the truth. The fee structures attached to various merchant accounts vary wildly. Third-party processors like PayPal and Square make getting set up with merchant services easy, but they charge extremely high flat fees for that convenience. A standard merchant account will almost always save you money over third-party options, but even they aren’t all created equal. Some merchant accounts use “tiered pricing,” which breaks transactions up into groups to determine fees. Others use “interchange plus” pricing, which dynamically assigns fees to each transaction based on the interchange rates charged by the banks. Interchange-plus pricing is the most transparent and generally the lowest fee model available, so ask about it when considering a processor.
2) Every Business Represents a Potential Risk
A bad or fraudulent merchant impacts everyone involved in the payments chain, from the customer to the processor right up to the big credit companies like Visa and Mastercard. Whenever a payment processor accepts a merchant, they’re taking on a risk, and in the case of brand new merchants, a potentially big one. As a result, your merchant application will go through a thorough underwriting process to ensure you and your company represent a small enough risk to make doing business with you worthwhile. That process can seem intimidating to many new merchants, and even drives some away from traditional merchant accounts. But, it’s really nothing to worry about, and the vast majority of merchants run into no issues with underwriting.
3) The Underwriting Process Doesn’t Have to be Slow
The downside of processors doing due diligence is that getting set up for a merchant account can take days and feel even slower, especially compared to the near-instantaneous signup process on sites like PayPal. While the underwriting process can be slow, it doesn’t need to be. In fact, the entire process can be completed, and a new merchant account approved in as little as a day – if you help the underwriters help you. To minimize application processing time, the most important thing by far is to ensure your application is fully complete and all documentation the processor asks for (including optional submissions) is included. Nothing will slow down an application (or potentially end it) like an underwriter having to chase you down for more information or finding inconsistencies in what you submitted.
4) There Are Higher Standards to Meet
One final note on the topic of underwriting: to get a merchant account, you need to have a real business. Unlike third-party processors, a payment processor providing you with your own merchant account will expect you to have a legally registered business (even for sole-proprietors) and an existing business bank account at an absolute minimum. Luckily, both are extremely easy to get. If you’re not interested in doing the paperwork required to register your business, a PayPal account might be a better fit, but the significant savings a real merchant account can offer you generally make the minor inconvenience of business registration an easy choice.
5) Dedicated Support is a Big Deal
Once you’re officially looking for a new payment processing partner, there are factors to consider beyond just price, and support is an extremely important one. All payment processors offer some type of merchant support, but they don’t all do it equally well. When choosing a partner, always look for a processor that offers you and your business dedicated support with your own account manager. Having access to a single point of contact who you know and can build a long-term relationship with is one of the single easiest ways to ensure your support interactions are always frictionless and resolved quickly. Problems inevitably arise in business, and when it comes to something as important as your ability to take payments, having someone that knows you and your business a quick call or email away is invaluable. Why deal with the headaches of an impersonal call center if you don’t need to?
6) Your Payment Processor May Offer Payment Gateways Too
A merchant account will enable you to accept credit card payments, but if your goal is to sell online, you’ll likely need a payment gateway too. Many merchants wind up getting their gateway directly from one of the top providers like NMI, Authorize.net, or others, but many payment processors now act as resellers for those companies, enabling merchants to get everything they need in one place. Choosing a payment processor that can also offer you gateway services will save you the trouble of having to deal with two vendors, two bills, and two support systems. So, simplify whenever possible!
7) Not All Processors Offer Next-Day Funding
When your business makes sales and accepts card payments, those transactions enter a settlement process that can often take days to complete. As a result, the funds from any given sale often won’t be available in your account for two to three business days at a minimum. Some payment processors offer a service called “next-day funding” that eliminates that wait and ensures funds make it to your bank account in as little as ten to twelve hours after transactions are submitted. But next-day funding isn’t universal, so it’s important to ask potential processing partners about their funding terms before making a decision. This is less important for brand new merchants who generally aren’t eligible for next-day funding anyway, but for experienced merchants making a switch, it can have a big impact on cash flow.
8) Value-Added Features Matter
Many payment processors offer value-added features designed to enhance your merchant account and make payments smoother and easier. Common value-added services included advanced fraud protection systems, chargeback defense, gift and loyalty card programs, reporting tools, and more. While your monthly fees and quality of support should be at the top of your list, if all else is equal, choosing a processor with a wider set of value-added features is a good idea. Even if some of those features aren’t relevant to you now, you may need them in the future as your business grows. Having them readily available will save you from having to switch your merchant account provider when your business is in full swing.
9) You Will be Required to Take Payment Security Very Seriously
The payment processing industry as a whole takes payment security extremely seriously, and as a merchant accepting credit and debit cards, you’ll be expected to do the same in order to protect your customers. The foundation of electronic payments security is the Payment Card Industry Data Security Standard, or PCI-DSS for short. PCI-DSS outlines 12 requirements all merchants have to meet to ensure their customers’ sensitive payment data is safe from cyber-attacks. Unfortunately, PCI compliance isn’t always simple, and some merchants fail to comply simply because they don’t know where to start – an expensive and potentially catastrophic mistake. This is one more reason choosing a payment processor with a great support team is so important. With the right processing partner, your direct support specialist will be able to walk you through your PCI requirements, making the process simple and ensuring you’re always as protected as possible against liability and fines.
10) Getting a New Merchant Account Doesn’t Have to be Difficult
The biggest reason established merchants stay in unhappy processor relationships and new small businesses avoid getting a merchant account altogether is the misconception that the process is difficult. With the right payment processor, getting set up with a new merchant account can be extremely easy and take very little time.
BAMS is one of the payments industry’s leading processors, and making the application and approval process as easy as possible is one of our top priorities. With BAMS, you can submit an online quote request in seconds, and we’ll be in touch with you almost immediately. Established merchants can request a comprehensive, five-point price comparison, in which a member of the BAMS team will pore over your existing monthly statements and show you – line by line – exactly where our interchange-plus pricing can save you money. When you’re ready to apply, a BAMS support specialist will be available to walk you through the process, ensuring your approval can be turned around as quickly as possible.
If you’re ready to find out more about everything a BAMS merchant account can do for your business, request your comprehensive five-point price comparison today.
