What You Should Know When Negotiating with a Merchant Account Provider

If you are a small business owner who has decided to provide debit and credit card processing to your customers, you need to set up a merchant account. Choosing a merchant account provider can be an intimidating process. There are a range of fees and other costs in merchant account service plans, many of which can be buried within the fine print of a contract.

However, the field is a competitive one and some fees can be negotiated in your favour. Furthermore, some rates and fees will be charged relating to the size, volume and nature of your business. Before you sign on the dotted line, you want to know exactly what you are paying for-and whether you could be paying less for it with another provider.

Knowing what to look for in a contract, and knowing what questions to ask a prospective provider, will bring you peace of mind and reassurance that you are not being taken advantage of or given a less than favourable deal. Here are some things to consider  how much can you make selling merchant services.What are Discount Rates and how are they charged? Not really a “discount” at all, this is a standard fee for any merchant account. The payment processing service provider always charges you a percentage of your credit card sales, and this rate can vary depending on a wide range of factors.

Here, having a solid business plan that realistically and conservatively estimates your volume of business, the average price of what you are selling and average sale per customer is essential. Higher-risk businesses typically get higher rates. Will you be selling big-ticket (expensive) items? Will you be selling online, where your customer will not immediately receive the product or service? (E-commerce is considered higher-risk).

What are Transaction Fees and how will they be applied? Debit card transactions will always have a small fee attached, as often will credit card transactions. Will you be charged a fee for sales transactions only or for every “transaction” (such as voids and refunds)? Again, certain types of transactions (such as E-commerce) will typically have higher fees, due to the card companies seeing these transactions as non-qualified.

What if any other fees are hidden within the contract? Empower yourself by demanding clear explanations of any other fees you will be charged before you are surprised by reading them in your bill. Will you be billed for your monthly statement? What will your minimum processing fees be (the fee you will be charged whether your sales reach that level or not)? Are there maintenance fees?

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