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How-To: Shop for a Merchant Account Provider Part III

September 15th, 2008

If you read Part I and Part II of this series you are all caught up on what to consider when choosing your bank for your merchant account, and some of the potential problems that can come along with using a bank. I will wrap up this part of the series by having you consider one common scenario merchants could face when using their bank.

Banks that handle their own processing or ones that act in the capacity of a registered ISO typically monitor and manage their own risk. We will cover the risk aspect of things in future installments, but picture this… You run a one day only sale on Friday and it just goes gang busters. In fact, you sold so much; you started having to take orders because you ran out of stock on the good stuff. So over the weekend, you place a nice big order with your vendor and it arrives first thing Tuesday morning. You cut the check and start unpacking. Just as you’re really digging in, the phone rings. Its ABC processing bank calling to tell you that you had such a great weekend, they’re going to HOLD YOUR MONEY. What’s the first thing that comes to mind? Yes—the check you just wrote to your vendor—on money you were counting on showing up in your account today. But guess what—it’s not coming. Not until you jump through all the necessary hoops that the overzealous risk managers require… and that can take weeks! Not a good position to be in…

You can avoid this by understanding your banks underwriting and risk management policies right up front. And let’s face it… banks are typically more stringent when it comes to anything associated with risk. This is why I endorse option C, where you work with someone who specializes in credit card processing.

It all comes down to doing your research. Obviously you have already figured this part out which is why you are here.  Although there are a lot of decisions to be made when opening a business, or looking to expand, but do not go into a merchant service contract lightly.  It will cost you!  There are endless resources such as your local Small Business Administration, Chamber of Commerce or local networking groups who can refer providers to you.  Also your local Better Business Bureau is a great place to find providers in your area who hold a good reputation. There are endless resources on the subject online, but as mentioned earlier always check the source.

Most importantly be prepared with the correct questions to ask ANY company you are considering working with.  We have prepared a list of “Questions To Ask” when shopping for a merchant account to help you become knowledgeable and get the best deal possible.  Check back for future posts where we will discuss other ways to get a merchant account!

Entry Filed under: Advice,How To: Shopping

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