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6 Essential Questions for Selecting Merchant Services

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All small businesses require some form of payment processing. Understanding how to select merchant services can impact your sales revenue and profit. Learn the essential 6 questions of merchant services, and the hidden rules of the merchant account game.

1: What are merchant services?

Merchant services enable you to process credit card payments from your customers. It’s a special account tied to a credit card processor that works with your customer's bank to help route payments into your bank account.

2: Who offers merchant services?

Merchant services are provided by specialized companies called merchant service providers or independent sales organizations that offer payment processing. Another source for setting up merchant accounts are financial institutions.

3: Which type of company is best for a small business owner?

It depends on your business situation. A home-based business owner may be turned down from a bank since their business is less established. Merchant service providers and independent sales organizations can be more flexible. While one person may feel comfortable dealing with their local bank, another might prefer a credit card processor who offers low rates. Choose what is important to your business.

4: Is a merchant account required to accept credit cards?

No. One option is to contract with companies providing payment processing on your behalf. Their prices are higher from taking a larger percentage of the ticket price. All credit card providers charge your small business a percentage of each credit card payment received. If you are considering selling on the Internet, a merchant account provides a better professional image.

If you allow a third party company to process your payments, you have to put your order form on the payment processing site. You may only be able to get your funds two or three times a month, limiting cash flow. With your own merchant account, expect to receive those funds in less than three days from the time of the transaction.

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