Merchant accounts are what allow businesses to charge credit cards and accept other means of electronic payments. The banks that actually do the charging and manage the money flow are called “acquiring banks.” These banks, or their agents known as ISO’s (Independent Sales Organizations), are the entities that will qualify businesses for the accounts, open them, get them set up and make them work. There are a number of important details to handle, and there are both government and industry controls and regulations on the procedures.
Merchant accounts are a fact of doing business in this day and age, and have kept up with the changing times by becoming more and more specialized. There are now special, online-only merchant accounts for businesses selling over the Internet, although the rates and fees on these types of accounts are higher than for the less risky in-store accounts. In fact, everything about a company and its individual characteristics is considered in these fee structures.
Customer profiles can also affect rates and fees. The acquiring banks and the credit card associations (Visa, MasterCard, Amex, etc.) set different discount rates, which is the most important overall cost of merchant accounts. The rates depend on the risks involved with a business category, the card that is presented, the sales environment (“card present” in stores vs. “card not present” on the Internet) and other factors.

How Merchant Accounts Help Your Business

Merchant accounts have some lesser-known costs, too. These are not exactly “hidden fees,” because they are spelled out in the contracts and in articles about credit card processing, but they are often overlooked. There are per-transaction charges, payment processing equipment charges, termination fees, statement fees and various miscellaneous costs that can quickly escalate and gouge a goodly sum of money out of each sale. Make sure to find out all the various costs and fees when you are shopping for merchant accounts.
Finally, don’t be shy about asking hard questions or pitting several account providers against each other to compete for your business. You will find that many other “required fees” seem to disappear when you press the issue, especially if your company does a good amount of charge card business. Don’t forget that generally accepted “good management” practices – good customer service, excellent record keeping, smart money management, high-tech expertise – can all prepare you quite well for efficient handling of your credit card payment processing.
The better your customer relations, for example, the fewer returns and chargebacks you will have, and chargebacks are one of the costlier items on the “Don’t Do” list for any business processing electronic payments. Good record keeping will also result in fewer late fees, penalties and processing errors. Finally, computer savvy and high-tech expertise will allow you to consider “virtual” merchant accounts that interface with the bank and processor in a secure, computerized environment that can save you money.