Does Your Small Business Really Need a Merchant Account?
Small business owners have to make a large number of important decisions. What type of product line or service offerings will you provide? In what media will you advertise your company? Where will your headquarters be? How many workers must you hire?
But arguably the most important choice you must make is which forms of payment you will accept. If you wish to allow your customers to use credit cards, then you must obtain a merchant services account in order to authenticate and process these transactions. This will require some planning as well as additional expenses. So is having a merchant account really worth it for your small business?
Not so long ago, many small businesses were able to operate seamlessly without securing merchant accounts. Consumers only turned to credit cards for major purchases, and used cash or personal checks for almost all of their everyday transactions.
But in the 21st century, the spending habits of buyers have drastically changed. Credit cards are quickly becoming the payment method of choice for many consumers. One big reason is the incentives being offered by credit card companies, including "cash back" awards and points programs, which cardholders can parlay into free or low-cost lodging, travel, dining, or big-ticket items.
A jump in crime compared to previous decades is another factor in the trend of increased credit card usage. Nowadays, some people carry very little money or no cash at all for fear they may become victims of robbery or theft. But if credit cards are stolen, they can usually be cancelled with a single phone call, and the cardholder is often not responsible for any fraudulent charges made on them.
As for checks, sophisticated printing technology is making it easier for criminals to create fake personal checks. Consequently, more and more businesses are deciding not to accept checks as forms of payment because of the increased risk of forgery, as well as the potential hassle involved with consumers' bounced checks. But because credit cards are secure and standardized, small business owners rarely have to worry about accidentally accepting fraudulent cards.
One of the most common excuses used by small business owners for eschewing credit cards is that a merchant account costs too much. It is true that most merchant service providers charge both setup costs and regular transaction fees.
However, you must also consider your revenue intake as well as your expense outlays. If you choose not to accept credit cards, chances are that one of your competitors will – and your potential customers might choose to frequent those businesses instead. So when conducting a cost analysis, be sure to account for the potential lost commerce you may experience by refusing to take credit card payments.
Moreover, if you do a little research, it is easy for you to select a merchant account which is very cost-effective for your needs. Comparing discount rates, perusing fee structures, and shopping around for the best deal on equipment and/or software can help shrink the price tag. Also, you can minimize your transaction costs by constantly monitoring your credit card traffic to avoid penalty surcharges, surging discount rates, and chargeback fees.
Another myth about merchant accounts is that they are too complicated to manage. Many small business owners are too keenly focused on keeping their operations simple.
What these individuals don't realize is that today's credit card processing systems are seamless and user-friendly. Equipment such as retail swipe terminals direct the clerk or cashier through every step of the transaction, and merchant account software can easily be set up to work in conjunction with accounting, inventory, and recordkeeping systems. And you will love the automatic transfer of funds into your business bank accounts – thus eliminating the need to make a run to the bank to deposit cash or checks.
Also, like small business owners who place a premium on personalized service, today's merchant services providers are keenly focused on keeping their customers happy. So they strive to provide comprehensive support networks which emphasize customer service. Small business owners can often get round-the-clock technical or operational support over the phone, through e-mail, or using instant messaging.
So in today's marketplace, there's really no reason why small business owners should not accept credit card payments. There is a host of merchant account categories to choose from, including retail swipe terminals for traditional storefronts, wireless processing accounts which can authenticate credit cards anywhere, touch-tone technology which permits credit card transactions over any phone line, and real-time processing which can take credit card payments over the Internet.
Initially, you will have to undergo an application process, acquire the necessary equipment and/or software, and implement the processing system. This process can take up to a few weeks before you can start accepting credit card payments.
But once the merchant account is fully operational, it usually functions without much oversight from the small business owner. And your customers will appreciate the convenience of using their credit cards to purchase your goods or services. So in the long run, the jump in revenues from increased traffic should more than offset any expenses involved with maintaining the system – and your company's bottom line will grow as a result.
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If your hotel business could use a healthy injection of business, a merchant account could be the solution that keeps you well ahead of the competition. Merchant accounts, in simple terms, allow businesses to accept and process credit cards as payment for goods or services.
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If you've recently started a small business and are thinking of ways to take it to the next level, chances are you've heard of merchant accounts. Merchant accounts provide an immediate dose of convenience for your customers because they allow you to process credit and debit cards for payments.
With the right product or service, even the little guy can take on his competitors and win. But in order to compete against the big guys, the small business owner needs to be able to offer customers the same conveniences other merchants are offering. One of the biggest conveniences you can offer your customers? Accepting credit card payments. And with the development of merchant accounts, that step is easier than ever.
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