What are the steps to setting up a merchant account?
There are many sites that would have you believe you could fill out a simple form and BAM! you have a merchant account. That’s not really the case, except for maybe Google and Paypal (you’d have to check their latest application info).
Most sales reps ask you:
– What is your average ticket?
– What is your monthly volume?
And then they give you a proposal. Just RUN!!!! You are certain to get a costly plan.
For online applications they’ll ask for some basic identifying information. After you’ve signed up you get requests for more information and then they tell you more information about your rates. You should have all that information upfront, before you ‘submit’. An application cannot be done in 5 minutes.
THE BEST processors are going to ask for this information on an ap:
– 2 years financial statements
– 3 months prior processing statements
– bank references
– company officers, ss#’s, drivers license #
– what type of business, forms of advertising, web site URL and much more. They want to establish and have proof that you are a legitimate business and not about to go under.
CASE STUDY FOR NEW MERCHANT ACCOUNT
I recommended a small business owner I know to sign up with Costco or Paypal to get established. I don’t know why, but he chose another company. He’s now running about $5000/mth and paying 4.5% because….every transaction is NOT QUALIFIED. That’s typical for any small business, but this was more predictable because he is B2B and there is never a credit card present. No swipe= non-qualified for most small businesses. By using a paypal virtual terminal he may have qualified better, though with recent updates, who can tell?
Bottom line: It doesn’t really matter because the volume is so low the overall dollars expensed are not that big. However, he needs to keep an eye on this. If his volume reaches $10,000/mth it will be time to look at other options.
RECOMMENDATIONS: Do not sign a long term contract if you are establishing your first merchant account. You need to keep your options open as your volume grows.