Merchant Accounts are necessary for almost every business. You need the ability to accept credit cards, regardless of the size of type of your business. Some businesses are more dependent on credit cards than others. For example: if yours is a customer service-intensive business such as a restaurant or a hotel, you simply cannot function without being able to process credit and debit cards, at least not for long. A manufacturing company that receives most of its' revenue by way of accounts receivables may be less dependent on card processing transactions but will still need that capability for the occasional customer, who prefers to pay with a credit or debit card.
It is unfortunate that in the current business climate many products are offered with so many options, "bells & whistles" that the customer is overwhelmed and left to the mercy of the sales representative. This seems to be true with Credit Card Processors as well. Most sales reps are going to recommend the package that favors his commission, not your cash flow. What you need is an basic knowledge of the major differences so that you can make the best decision for your situation.
If you are confused by all of the credit card processing offers, you are not alone. Most business owners get multiple offers from banks, independent sales organizations and credit card processors each week. These offers come so fast and furious that most people just tune out and pick one. This may not be the best approach to choosing your merchant account. You stand to lose a lot of money if your credit card volume is significant.
One of the sources of confusion is the way Credit Card Merchant Services are priced. The two general types of pricing are Interchange Plus Pricing and Tier Pricing. If you do not know the difference between the two, it is probably because your sales representative did not want you to know.
The way your customers pay will also affect your overall costs, particularly your transaction fees. If you swipe your customers' credit cards, your transactions fees will generally be less than someone who keys in the credit account numbers. A MOTO (Mail Order/Telephone Order) business will incur even higher transactions fees.
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