Getting Setup to Accept Credit Cards
The process to get started processing credit cards is similar to applying for a loan or a mortgage. There is an application process that you must go through in order to start accepting credit cards like Visa and MasterCard. You will need to provide documentation about your business model, this may include such things as per business type: Corporation, LLC, sole proprietor, or partnership. Additionally you are going to need documentation about your products and services. You also need to lay out refund policies and privacy policies if you have a website. Merchant processors classify small businesses into different categories. For example, the treat and classify and e-commerce website differently than a retail establishment. A website Internet business is correctly classified as a "MOTO Merchant Account" this stands for mail order telephone order merchant account. In this case the cardholder is not present, and they are not signing a receipt indicating it read the terms and conditions of the purchase. On the other hand card present transactions also known as keyed in transactions are where you are getting a signature and keying in a transaction into a terminal and physically swiping their credit card. Additionally, banks classify levels of risk to businesses some are classified as low risk and some are classified as high risk. Most of the risk level has to do with the chances of charge backs and disputes and potential losses to the merchant processing company.
New Small Business vs Established
If you are just getting started, you have to be understanding of the amount of processing volume you are going to process. Banks consider such things as average monthly volume, average ticket, and Max or high ticket. These refer to the amounts you are going to process that your business. These amounts are important as they also indicate how much risk involved there is for the bank. If you request an average monthly volume of 10,000, the risk involved is low and the amount of scrutiny involved will be less. If you are processing large volumes such as 500,000 to 1,000,000 per month, the bank is going to ask for significant documentation including last two years tax returns, bank statements, and profit and loss reports. So how much you are applying for will be a significant factor in being accepted or declined or denied. It you are a new business you probably will be paying higher rates than established one. This is because an established one as processing history and documentation to demonstrate their low risks with underwriting their account. A new business doesn't have this history to go on and may need to process for a year or so and then needle to negotiate lower fees.
Some common fees well first of all include the transaction rates that you pay. A retail store or in person card present transaction will typically pay rates between one and 2%, an internet ecommerce website selling auto parts for example they pay rates around 2 to 3%. A high-risk business on the other hand may be charged rates as high as 3 to 4% and depending on the business model. Other these include statement fees, PCI compliance these, monthly minimums, annual fees, and start up fees. Be wary of a credit card processor posting very low rates on their website or promising 24 or 48 hour approvals. These are massed marketed credit card processing companies that frequently approve everyone and then shut them down a few months later holding onto their funds. As the old saying goes if it's too good to be true, it probably is. A credit card processor serving small businesses needs to be profitable just like your small business and they're going to charge some basic fees to cover the costs of their business and be profitable. So be smart in understanding that the merchant processor is going to charge basic fees in order to stay in business and service you with customer service and customer support. When you fill out the merchant application, keep in mind, that you are also signed a contract and read the contract carefully. All merchant processing companies applications are contracts there is no way around a "no contract credit card processing provider". Again it's too good to be true, it probably is.
Credit Checks and Personal Guarantee
When you apply for your account with the merchant provider they will run credit checks on your business and the owner of the business personally. This is a common practice among all providers. Fortunately if you have a credit score that is poor, or bad, there are still many providers that will approve you. We work with several banks that are open to approving merchants with poor or low credit scores. If your score is good for example in the 600s 700s or 800s, you will have an easier time having your application approved. If you have been denied or declined by another provider we can help you get set up for credit card processing. Merchant services but also require you to sign a personal guarantee on your application, especially if it's a new business there is no way any legitimate bank will accept and approve your application without a guarantor. So be prepare to be a guarantor your application.