Here are some tips to ensure your account is set up correctly:

1.      Processors are being more diligent in setting up guidelines, like monthly minimums and high ticket limits, and sticking to them. Setting up a merchant account with incorrect parameters can cost your business a lot of money. A tile company was set up with a high ticket limit of $600, and made a sale for $3000. The money was held by the processor and awaited verification from the customer with their issuing bank. The customer was unavailable to make the verification for 2 weeks. The tile store did not receive their money for the entire 2 weeks. Make sure you explain to your sales agent your specific volume needs and avoid the unnecessary headache that can be associated with large purchases.

2.      When selecting a merchant services provider for an online business, it is important to ensure that you have adequate reporting. With an online business, you don’t get to see your customer face to face. You have to have a way of retrieving customer information in the event an issue arises.  Make sure to see a demo of the reporting the online system will be using.  This will save you time and money when going to see your accountant too. If an issue does come up, will there be a live person you can talk to?  Make sure you have access to 24/7 live support.

3.      Ask about Underwriting, Risk Monitoring, and Fraud management systems.  Is the company you are processing with PCI DSS Compliant? It is important that your and your customer’s data is secure. If you fall into a High Risk category, can the company you chose still get your money to you in a timely manner? Will they expect money to be put in reserve, and if so, for how long? Does the chosen company have a system for monitoring fraud? Many providers don’t have an early warning system to alert merchants in the event of stolen credit card purchases.

The more your sales agent and processor know about your business, the better your overall service, rates, and technology will be. Look beyond the rate and pick a partner that will help your business grow.

Once your business is online and your shopping cart has been built, you have to select a payment gateway. Many merchants select their payment gateway based on what their merchant services provider tells them. There are hundreds of payment gateway options out there, and not all of them measure up.

A gateway facilitates your online payments by connecting your secure order from your merchant account to a processing bank. Something as important as the transfer of money should take some research. When selecting a gateway, consider available features, reliability, and support.

Some well known gateway options may not be your best bet. Authorize.net is a gateway that offers nothing more than a name. When it comes to support, this popular option falls short on all levels. Forty-five minute hold times, getting the run around from the help desk, and being a one trick pony are all this gateway has to offer.

An important item to look for in a gateway is ease of integration. If you don’t have a lot of money to spend on programming, or you are new to programming, you should select a gateway that allows you to follow some easy copy and paste steps to get your site up and running with all the payment options needed. A payment gateway should have a platform for identifying and preventing chargebacks without you having to take time out of running your business.

Some additional features to look for are a robust CRM and a strong customer database so you can run promotions and take care of your customers. A good payment gateway allows you to take payments in multiple fashions, such as recurring billing, bill me later, and ACH. There are gateways out there that even do your marketing for you. One such product is the Check-Out Box .

When selecting which gateway is going to support your business, cost should be the last deciding factor. Many online gateways may have low startup costs, but have hidden costs for additional features. For example, Authorize.net considers E-check and recurring billing to be additional features with additional charges.

I hope this sheds some light on those of you looking for a gateway solution. I invite those looking for a strong gateway to ask questions and give their opinions on gateway experiences you have had.

I then noticed the sales agent wrote, “We will save you X amount of dollars by educating you on how to make your non-qualified EIRF (Electronic Interchange Reimbursement Fee) qualified.” What they did was take the non-qualified transactions and told her they would be qualified, so she would pay less Interchange fees on those transactions.

This situation happens often, and merchants are not always aware of what to look for or who to trust. There is no way this merchant services provider could guarantee what interchange category each card will fall into.

Here are some tips to ensure you are being treated fairly:

1.       Keep in mind that your merchant account is under a contract and is enforceable by law. These contracts are long and not always easy to understand. Make sure that you ask for your full terms and conditions. Many sales people will give you the merchant application, but not the terms and conditions that are associated. Online applications are also binding contracts with your electronic signature.

2.       Make sure you ask for all hidden fees to be disclosed. Look for fees such as merchant club fees and supplies fees. Some processors will have adjustment fees, network fees, PCI Compliance fees, standard fees and annual fees. A good way to avoid being surprised by these is to see sample statements or get references.

3.       Look out for bait and switch practices. Processors will entice you with a low rate, but this rate is generally for a specific type of card. Make sure you know exactly what you will be paying for all your card types.

4.       These days a lot of processors are running free equipment programs. These terminals are not always free and could end up costing you $1000s in the end. Some come with a hefty annual fee and others are simply a placement. If your placement terminal is not returned in new condition, you can be liable for 3 times the cost of the equipment.

5.       Make sure you are not signing any long term contracts that have a large cancellation fee.

I think as time goes on and merchants become more educated, these types of sales agents will be weeded out. If not, merchants should not give up on the fact that there are good honest companies out there.

Merchants may be required to provide the following:

• Two years of tax returns for the guarantor
• Six months of processing statements. If you have not processed before, you will be required to provide six months of bank statements
• If you are an internet based account, you will need to make sure you have a clearly visible return policy
• It helps to have a tangible product – I once had a loan restructuring company create a package with a welcome letter and question kit to send to all his customers once they purchased his services.

There is always a way to get a merchant account for any business type. Some business types such as Adult, MLM, Telecommunications, Escort Services, Internet startup companies and Travel may require higher rates, and in some cases a reserve account. The amount you may be required to put in a reserve account varies, based on your volume and business type. Most merchant services providers typically are looking to protect themselves against chargebacks. A consumer can dispute a charge for up to 180 days after the purchase, so processors create reserve accounts in case a chargeback does occur. In my experience, banks like your chargeback ratio to remain under 1%. Otherwise, merchants can be fined and have their merchant account turned off.

There are always offshore options. Offshore processing may be the only option for some business owners and can be costly with rates as high as 10%. Typically, merchants have to pay wire transfer fees as well as high transaction fees. To learn more about these and other options, contact your merchant services provider.

Since there are many different processing categories for Interchange rates, they can be confusing to most merchants. Merchants pay higher or lower rates depending on, but not limited to, whether or not it was a rewards card, purchase card, or debit card. Rates can also be assessed based on your SIC code and how often you batch your terminal.

I would recommend that all merchants become familiar with the Interchange rate for their industry, as well the manner in which they take their cards (swiped or keyed). This way you can negotiate your rates with your merchant services provider accordingly. Just because your payment processor claims the rates went up does not mean they went up for your type of business. Some processors may even entice merchants with low rate like 1.11%, only to have you start processing and realize that rate does not pertain to your type of business.

Fortunately there are a lot of processors out there that don’t hide fees from their merchants. It is important for merchants to be educated about card processing fees.

If you have received a statement with an increase notice on it, be sure to do your research so you know exactly what is being increased.

Let’s face it – we all strive to have that BMW as opposed to a Dodge Neon, and even shop around for the best appliances. Knowing this, have you ever stopped to wonder why we, as business owners, opt for the lowest bidding credit card processor for something as important as our business?

As with other products, cheaper does not necessarily equate to better. How about reliability? If your customers are charged the wrong amount, or transactions are declined due to an unreliable or inaccurate gateway, who do you think they will blame? That’s right, YOU! Consider this – is the money you’re saving using the cheapest solution worth the cost of losing future business?

Let me share with you this example, a few weeks ago, a merchant was having trouble getting cards approved on his website. He then had his funds held by his processor. His merchant services provider told him it was his gateway and conversely, the gateway provider told him it was his merchant services provider. Needless to say, this merchant chose his provider based on the lowest bid, and what he got as far as service and reliability was a whole lot of finger-pointing and denial of liability.

I’m sure as business owners you are bombarded with calls and mailers from merchant services companies on a daily basis claiming their fees are the lowest. Fees for merchant services are an unfortunate reality, irrespective of the processor you choose, so it is important to choose the right company to partner up with. Here are some things you should know when deciding on a merchant services provider:

• Make sure whatever gateway you choose is compatible with your shopping cart software.
• Rates and fees are determined by many factors: length of time in business, percentage of sales made over the phone or the internet, type of business, personal credit rating, and dollar amount of sales per month. A typical rate should be about 2.30% to 3.5%, but some companies charge as high as 6%. Poor personal credit or business type may warrant a much higher rate.
• Do not agree to a high discount unless you are sure no other company will process your charges for lower.
• Be sure to ask about all fees involved such as Gateway fees, ACH fees, monthly minimums, Address Verification Fees, transaction fees and statement fees.
• Read all agreements closely to determine the circumstances for which your money can be put on hold.
• Find out if there will be a hold or reserve on your account. If so, how much with be held and how long will it be held for?
• What types of fraud and risk monitoring does the processor and gateway provide?
• Who do you call when you have questions? For instance, a processor offering its own gateway is a better choice since there will be fewer support calls to make in the event of service interruption.

In my experience in this business, I have come across numerous merchants that got exactly what they paid for – very little.

Take my advice, do your homework and don’t settle for the lowest bidder.