Accept Credit Cards for Increased Profits
When I began my gift basket business in the 90’s I didn’t have a website nor merchant account. Of course I didn’t have any customers either.
My first customers would order their gift baskets, I would ship their orders and wait for them to send me a check.
Scary, isn’t it?
I shudder to think how trusting and naïve I was back then. But fortunately, I learned from researching and networking that accepting credit cards is not only a good idea, but it’s critical to running a successful business and increasing profits on and off line.
There are several reasons you should set up a merchant account and accept credit cards.
- It enables you to accept a wide variety of payments and thus get your money up front.
- It provides ease and convenience for online customers who will return to your website because you’ve made it easy for them to buy.
- It enables you to keep track of online and offline transactions using the monthly statements.
There are three ways to set up a merchant account and credit card processing.
1. Get a merchant account from the bank or credit union where you already have a personal account. These institutions are very conservative, however, and may decline to work with a small business.
If your bank does agree to work with you, examine the terms carefully. Some banks charge a monthly fee whether you have any sales or not. Even if you don’t get a merchant account through your bank, you will still need to designate a business or DBA account for depositing the proceeds from your business.
2. Work with a broker or independent merchant provider who will serve as an intermediary. This person or company may convince a bank to work with you, or set you up a merchant account service that processes credit cards. There is usually an application fee and you will be charged a percent of your sales as a processing fee. The benefit of this intermediary, however, is they can usually get you a better fee than you may get directly.
This and the first method require a waiting period for approval. Some will even want a copy of your brochure so they can verify what products you’re selling.
The independent provider who set me up was Mosley Bankcard Service who specializes in working with homebased businesses and can help you no matter where you are in the country.
3. Use a third party processor, such as PayPal, Click Bank or ProPay. This is the quickest way to begin accepting credit cards since approval only takes a few minutes and they don’t check your credit. But do your research first since some charge a hefty setup fee and a high percentage for transactions, while others may not. Also, you want to investigate whether payments can go directly into your checking account and be immediately available to you or must you wait for your money.
Once you have a merchant account you will need a payment gateway, such as www.verisign.com which enables you to get real time authorization. Along with this if you set up with a bank or independent provider you will need to add a secure shopping cart on your site that is compatible with your payment gateway. This company will provide your virtual or real credit card terminal.
With a third party processor you won’t have to be concerned about a shopping cart or payment gateway. But when customers place orders through a third party processor you’re sending them to the company website, such as when you use PayPal. Some merchants are uncomfortable with sending customers to another site for payment.
In addition to accepting credit cards and debit cards, third party processors such as PayPal also allow your customers to pay by check and money order. You will be notified to hold the order until the check is cleared.
When I began Gift Basket Business World I decided to add PayPal. I’ve been very happy with their service, including tech support when I needed it. On occasion when customers prefer to give me their credit card information on the phone instead, I’m able to handle that also with my separate merchant account. If you are earning less than $1,000 monthly, a third party processor is probably the easiest to set up and manage in the beginning.
Before you make your final decision in choosing an independent merchant provider or third party processor, check to see how customers evaluate them. Just put the company’s name in Google and scroll down to listings from message boards and forums. You’ll read the good, bad and ugly. Even though some of the extremely negative ones may be from customers who violated terms or are jealous competitors, it will still give you another perspective.
Although there are a number of steps involved behind the scenes from the moment you accept a credit card and the approved payment lands in your bank account, they take place quickly once your merchant account and credit card processing system are set up. Deciding whether or not to accept credit cards is no longer an option. Without credit card acceptance you’re not only losing business and discouraging customers from ordering, you have shut the main flow of your profits.
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