Merchant Accounts: Are they worth it?
Merchant account services allow a merchant to accept credit cards as payments, and carry out credit card transaction processing. Customers have a tendency to spend more if they can swipe their card and worry about the bill later. Also, credit cards are convenient, hence widely used!
The Cost of Accepting Credit Cards
Merchant accounts can be costly. There are numerous merchant account providers of good repute that offer good value – however, even a larger number of providers charge excessive fees and have hidden expenses that you were not aware of when signing on the dotted line of the agreement with them.
Fees that you may have to pay for a merchant account include per transaction fees, monthly or annual maintenance fees, and more.
Online Businesses Need Merchant Accounts
Online merchant accounts are crucial for success. If you’re on a website, wanting to buy a gadget, it would be cumbersome to mail a check or money order. Instead, making a purchase right then with your debit or credit card would be much more desirable. Most people don’t want to take the time to write and mail a check or money order for an online purchase- not having the ability to accept credit or debit cards will severely hurt your business as an online merchant.
As the merchant, credit and debit cards make your life easier, as well. You get your money much faster Credit card payments offer you payment within a day or two of the customer putting in the card details. Hence, the cash flow is much better, allowing you to advance you to business venture!
Deciding if a Merchant Account is worth the Fees
So, the fees that are paid for merchant accounts are worth the value you receive from merchant accounts? It all depends on the type of business you are operating and the volume of sales you process on a given month, as well as the merchant account provider you choose to go with. Merchant account providers are not a one-size-fits-all solution for every business, and you really need to do a little research before selecting a provider.
Consider the per transaction fee, the application fee, monthly maintenance fee, set up fee, and any annual membership charges you must pay. Do you have to purchase or lease any special equipment? Is the software for processing online credit card payments included in the service, or is that an additional fee?
Once you have that information for a few different merchant account providers, you can determine what you believe your credit card sales will be each month. This may be difficult to do, but make your best estimate based on your current level of sales and the idea that people typically spend more with a credit card than they do with cash.
Determine what fees you’ll pay on your estimated amount of sales each month, and see if it makes sense to pay for a merchant account. As mentioned previously, if your plan is to operate an online business- you really need a way to accept credit card payments online in order to become successful.
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