When Diners Club founder Frank X. McNamara came up with the idea of creating a credit card that consumers could use in multiple places, charging the merchants for each transaction back in 1950, he could not have predicted how the merchant accounts services industry would grow. In fact, he thought credit cards were just a passing fad and sold his shares in the company to his partners just two years later! Today, as a merchant, not catering for sales made using credit cards or debit cards puts you at a distinct disadvantage, but when it comes to determining the best merchant accounts services available, you should strive to find a balance between what your customers want and what your business needs are in order to maximize profit opportunities.
Debit & Credit Card Transactions Growth
According to reports compiled by the United States Census Bureau, the number of households that have and use debit cards has increased significantly from 2000 to 2009, with projected figures for 2012 also expected to see this upward trend continue:
• In 2000, there were 160 million debit card holders who made 8,291 million debit card point-of-sale transactions.
• By 2009, the number of card holders had jumped by over 20 million to 183 million, with 38,541 million transactions.
• The projected number of debit card holders for 2012 is 191 million with an estimated 52,620 million transactions totaling 2,089 billion dollars of purchases.
While the US Census Bureau’s reported credit card figures do not reflect the same expansion, with a projected number of 160 million credit card holders in 2012 making a projected 2,378 million transactions of 870 billion dollars, these consumers remain a considerable spending force.
Matching Your Customers With Your Merchant Accounts Services
Before investigating what merchant account services best suit your needs, you may want to take some time to develop a profile of your consumers and determine what they want from you in this area. There are an increasing number of merchant accounts services available to you with varying capabilities, such as mobile or wireless services, and also a wide range of equipment to purchase. While it may benefit you to offer all of these options and capabilities, some of them may not be services that your clients are demanding or would use. You do not have to purchase all the bells and whistles if all your customers seek is the bicycle!
You may also want to take into consideration how much of your business is conducted through face-to-face transactions and how much is taking place online. Most providers offer flexible merchant accounts services that factor in both of these, although you may obtain your payment gateway – which is your e-commerce service enabling you to transact online – from another third party supplier. Once again, you should gain an accurate picture of what your customers’ preferences are to help you to decide on what your needs in these areas will be. Does your payment gateway need to have a shopping cart structure, for example? Or, do you need credit card services that can accommodate a lot of international transactions? If you cannot obtain all of your merchant accounts services from one supplier, look for vendors who may have relationships with each other or who offer bundles.
Rates & Fees
As with any service provider, you are going to want to make sure you are well-informed and aware of all rates and fees involved with any contract you enter into with a merchant accounts services vendor. The credit industry can be difficult to navigate and it may seem overwhelming to come to grips with every single aspect of every single transaction and its related rates and possible additional fees. As with most comparative shopping, if the fees and rates being offered are significantly less than those being offered by competing vendors, take a closer look at the fine print. You may also want to ensure that your rates are locked in contractually so you are not hit with significant and sudden increases. Two of the most important rates and fees are:
1. Discount Rates – the discount rate is a percentage amount that is applied to the dollar amount of every transaction that is made. Each transaction will fall into one of three classifications: qualified, mid-qualified or non-qualified. Depending on the classification, the rate charged will vary with qualified transactions usually incurring the least fee. Ensure that you are aware of how your merchant accounts service provider classifies transactions, including what timeframe restrictions may apply.
2. Per-transaction fee – the per-transaction fee is a separate fee from the discount rate that is also incurred on every transaction that is authorized. Be aware of additional fees for when a transaction’s authorization fails.
These are just two of the fees that you will be charged. Make sure you know upfront what every transaction is going to cost and also what monthly fees or chargeback fees may be part of your contract.
Now that you have decided you want to accept credit and debit transactions, you will need the equipment to do this. Some companies may lease you this equipment while others will sell it to you, or both. As with deciding on what services to offer, your customers’ preferences and needs should play a role in determining what equipment you require. For example, do you need to be able to make transactions remotely?
The best merchant services will offer customer service and technical support as part of your contract. Read testimonials about the ease-of-use of the equipment and response times for technical support, and also how easy it is to install the point-of-sale equipment and credit card terminals. You may also want to look at what businesses of a similar size to yours are using.
It is a widely accepted fact that if you are doing business in today’s marketplace, you need to be able to accept credit card and debit card payments to truly be operating at your best. But just because you should be doing something, does not mean that there is a one-size-fits-all solution. By taking into consideration the purchasing habits and trends of your customers, you will be able to paint an accurate picture of your customer needs. Being able to calculate what merchant accounts services you cannot afford to be without alongside what services you can afford, in addition to ensuring that you know exactly what you are getting into and what you need to pay, you should be able to find a satisfactory solution.
The best business relationships are partnerships and by seeking a vendor that is intent on helping you and assisting you in ensuring that you are providing the best service possible, customer satisfaction should be something you are giving and receiving.