Credit Card Processing Buyer's Guide

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In this article...

Introduction
Accepting credit cards
Types of processors
Qualifying
Pricing
Negotiating with providers
Choosing a service
Buying tips

Qualifying for merchant accounts

Before giving you a merchant account, a merchant services provider will want to make sure that you run a legitimate business that will not leave the provider liable for fraudulent charges. The provider will start with a basic background check. This includes a thorough credit history review of the owners or officers listed on the application, in addition to credit references from two to three suppliers.

The most important question that providers want answered is whether your business is likely to have a high incidence of charge-backs on your merchant accounts.

For the most part, tangible products are considered to be much safer than services. Also, businesses that deliver purchased goods immediately in exchange for payment are viewed as being less risky.

Providers also will consider the types of credit card transactions that your company performs before they give you a merchant account.

As a general rule, card-present transactions that allow you to swipe the credit card and obtain a signature in person are considered to be much safer than card-absent transactions that take place by phone, by mail, or over the Internet. Being a higher-risk merchant does not necessarily prevent you from getting a merchant account—but it will drive up your costs.

Finally, if you have had merchant accounts in the past, providers will require old statements to better gauge your charge and charge-back volume.

Some companies advertise high acceptance rates in an effort to impress. Do not be lured; 99% acceptance rates are a common gimmick and don't really mean much. Instead of focusing on the percentage, look for providers who help you address any deficiencies in your credit score or can show a history of working with businesses like yours.

Introduction

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