Small Business Merchant Account

Small Business merchant Account Basics

Having a merchant account to accept credit cards is vital to both online and offline traditional retail stores, bars, restaurants, and any type of industry where credit card transactions are vital to success.

Fees for merchant accounts are like interest rates on loans - they vary depending on the perceived level of risk to the bank. Users of credit cards may refuse to pay certain charges for a variety of reasons, ranging from returned products to honest errors to fraudulent charges. Banks are generally pretty lenient about allowing buyers to make chargebacks. The risk to the bank is that chargebacks may occur after the merchant has already been paid.

Banks do several things to limit their exposure to chargeback risk. They may ask you to personally guarantee the account agreement, meaning that if your company ends up owing money to the bank, you will be personally liable. Naturally, companies in businesses that have a high rate of chargebacks, especially those selling big-ticket items, will pay less favorable fees. Banks will also hold back a certain percentage of your money every month as insurance against future chargebacks. If you are deemed to be a high chargeback risk, it could be months before the customer's money makes it through the system to your bank account.

Apply Small businesses merchant account Tips

Credit Card Acceptance. The chosen provider should accept most "major" credit cards such as Visa, Discover, Mastercard and American Express. If the merchant account does not accept one or more of these payment methods, it may be best to find a better provider of merchant account services.

If you are a relatively new business or a small business with limited funds you may want to consider using PayPal or 2Checkout as your merchant account provider thus enabling the use of credit card processing.