Simpler Smarter Savings

To survive in the competitive economy of today’s retail climate, the ability to accept credit card payments is a must. For the sake of business efficiency, Internet marketers and traditional business owners alike must find a way to balance customer convenience with their own desire to maximize profit and minimize expenses. Deciding on the right merchant account is a key factor in balancing these opposing needs.

When business owners begin the search for a merchant account provider, they need to be aware of how banks handle these accounts. Smaller banks tend not to have the resources available to dedicate to merchant account processing and may outsource these accounts to larger banks. This does not lead to business efficiency for the merchant account holder since he or she is then forced to work through two different companies to manage transactions. Costs may also be higher with smaller banks since they must pay larger banks to take over the management of customer merchant accounts.

In the interest of saving money, the business owner who desires a merchant account may be better served by dealing with a bank that specifically handles them. This may entail hiring a bank that is not in the immediate vicinity of the physical location of the business. The business owner needs to weigh cost savings by going with a larger bank verses costs of retaining a merchant account with an out of town bank.

One such consideration is the cost of fuel if the chosen bank is close enough to drive to. If the bank holding the merchant account is out of state, the business owner needs to consider any inconvenience that comes with that. To aid in making the decision, it may be helpful for the business owner to list approximate costs of each on a spreadsheet. He or she can then analyze the data and choose the right merchant account provider. Before making any arrangements, the business owner should estimate monthly sales so the right type of account is established.

To keep costs under control, business owners must be aware of all fees that a merchant account provider is charging them to have the account. Providers may charge an annual fee, a set-up fee, a monthly maintenance fee, a per-transaction fee and possibly a statement fee. There is also the likelihood of being charged an additional amount to accept high-risk credit cards and process charge backs. While the fees may be legitimate, it is up to the business owner to understand and budget for them. By knowing what is going out in merchant processing fees each month, the business owner can reduce the amount that is ultimately taken out of the company’s profit.