Do You Recognize The Perks Of Credit Card Processing?
In todays fast paced marketplace, the ability of a business to accept credit cards is simply taken for granted by most customers
. In some places, in fact, plastic is far more prevalent than paper. If your business has yet to take the leap into the modern era of commerce, it only takes a few moments to learn about the many perks of credit card processing and the simplicity of making it possible.
Merchant Accounts
No business can accept payment via credit account until it has set up a special type of bank account called a merchant account. Merchant accounts cannot be administered by a normal investment bank most familiar to the public, but can only be supplied by a merchant bank, which is a specialized type of financial institution that deals only with registered legitimate businesses.
Account Providers
Because of the prevalence of the demand for merchant accounts in the business world, the holding and administration of a merchant account has become a big business of its own. Today, far more merchant accounts are set up and regulated by third party liaisons, called independent sales organizations (ISOs), than merchant banks themselves. Depending on the kind of business you run, each has its distinct drawbacks and advantages.
Merchant Banks
While on the surface of things it may seem to make more sense to leave middlemen out of the equation when it comes to most business dealings, in the special situation of merchant account management, just the opposite may be true. The main advantage of working directly with a bank is that you will likely save a bit of quick money on fees and extras, however this is balanced by two caveats.
The major trouble with working with a merchant bank directly is that the application process for establishing a merchant account in this way can be quite lengthy and rather daunting. This makes a lot of sense when you begin to think of the incredible number of businesses that must apply for merchant accounts in a given year. By testing a companys mettle and reputation, they are merely protecting their interests.
Furthermore, maintaining a direct account with a merchant bank means forgoing the many services and perks that come along with a reputable ISO, along with those annoying fees. Indeed, even businesses that could easily win a merchant banks approval choose to work with ISOs in favor of the less specialized, thinner staffed expertise of the bank.
Independent Sales Organizations
The sole purpose of an ISO is to administer and maintain merchant accounts for businesses in need. It remains an industry where there is a healthy level of competition, mostly because the business world demands such a high amount of specialization in terms of merchant services.
The very strength of a good ISO, in fact, is its ability to cater specifically to a particular business types special needs and to profit from that versatility. Unlike a merchant bank, an ISO can offer general extras including customer service, equipment sales and rental, batch processing and other back office duties. Additionally, a well established ISO can offer more targeted services for niche industries, such as the hospitality field where reservations, deposits and cancellation fees among other considerations can make charging a credit card more complicated than usual.
Of course, one drawback to opting for an ISO involves sometimes lengthy contracts that come with plenty of fine print and cancellation fees should you feel unsatisfied. This makes the vetting process you put a potential ISO through one of the most important steps of setting up a merchant account. Before signing any agreements with an ISO, be sure it has the explicit sponsorship of an FDIC insured bank.
Fees and Charges
Before entering into a contract with an ISO or merchant bank, its a good idea to become familiar with the basic charges you might run into. Nearly all ISOs have come to charge set up fees for the establishment of a merchant account, and a large amount of bills may come up front. This can be a way to protect the interests of an ISO, but be wary of exorbitant billing.
Once your account has been established, all ISOs charge a certain rate for each transaction, based on the risk factor involved. The cheapest type of credit card processingwith the card holder presentdemands an average rate of around 1.85 percent.
Regardless of the type of business you run, the ability to process credit cards is an obvious way to increase customer satisfaction and ensure their repeat business. Whether in a retail situation or on the web, consumers have grown familiar with the convenience of simply paying with plastic. Take some time now to discover the ISO and merchant account that is just right for your business.
by: Andrew Kilmeade
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