6 Steps To Getting The Perfect Merchant Account

Save Money By Planning Ahead

Bucket of Money
© Depositphotos – Oleksandr Marynchenko

Opening a merchant account for your business is easier today than it's ever been. With processors advertising “instant approval” and “no contract required,” you might think that a few Google searches and a rate quote are all you need to get started. But despite a few improvements to the credit card processing industry over the past few years, many of the same old hazards persist.

Merchants are still getting tricked into signing up for unwanted accounts, they're still getting trapped in undisclosed, four-year leases, and they're still having tens of thousands of their own dollars withheld without any advance warning. In other words, this industry's still out to get you.

So, how can a merchant avoid getting scammed? The answer is simple: research, compare, and communicate. More specifically, there are six clear steps you can take to ensure that you find a merchant account provider who offers fair, transparent pricing, protects you from liability, is there when you need it, and genuinely helps your business grow. Below, we've outlined the ideal roadmap to finding your perfect merchant account.


1. Educate yourself about rates and fees.

Sites like CPO have made it easier for merchants to understand their statements while making it much harder for merchant services providers to scam people. In fact, a large number of unethical processors have either rebranded or completely gone out of business in the past few years. However, other providers have simply come up with more sophisticated ways to hide their fees and deceive merchants about the true cost of their service.

In this industry, you want to be an informed shopper. A mistake can cost you thousands of dollars, so research your current provider's reputation. Research any prospective providers' reputations. Be prepared to negotiate, and understand the difference between a fair price and a garbage fee. Don't simply take an agent's word on anything.

You can spend hours trying to find an independent source for information about merchant account rates and fees, or you can easily get it all in “Fee Sweep”, our short rate negotiation guide.


2. Identify the products and services your business needs.

Pricing isn't everything. Ask yourself what you need from your payment processor. Do you require an EMV terminal? Mobile phone processing? Online payments? Do you run a large retail location, or are you a one-person operation? How often do you need to accept credit cards? Is your business only open for a few months out of the year? Some merchant services companies specialize in enterprise-level B2B payments, while others offer robust point-of-sale hardware setups for restaurants. And if your business is in a high risk sector, you may not even be able to open a merchant account through a conventional provider.

Be sure to do some research and compile a list of providers who specialize in your business needs before you turn your attention to contractual considerations. If you sign an agreement under the expectation that a provider will operate outside of its area of expertise, then it's only a matter of time before that provider lets you down.


3. Understand your security responsibilities.

No matter how you accept credit cards, there will always be some security risk associated with taking digital payments. The industry is continually evolving to combat fraud, and fraudsters are continually exploiting new vulnerabilities wherever they can. That said, the vast amount of responsibility for fraud prevention should not fall on your business as long as you understand how PCI compliance works.

The Payment Card Industry Data Security Standard (PCI DSS) is a series of regularly updated security protocols established by the credit card processing industry to ensure that all providers and merchants meet a rigorous standard for data security. Most of the requirements, such as data encryption, are beyond the average merchant's level of technical expertise. Others, such as not storing sensitive customer data at your business's location, are your responsibility.

Your PCI compliance obligations will vary depending on the specifics of your business and the types of service your provider is offering. You'll need to communicate clearly with your provider about how you're accepting credit cards and ask them what precautions are built into their products to protect your customers' data. Some providers force merchants to obtain annual or quarterly PCI scans to verify compliance, while others just require the completion of an annual PCI self-assessment questionnaire. Most providers charge a fee for each month that a merchant fails to meet industry standards for PCI compliance.

This may seem like a headache (and it is), but do not blow off your PCI compliance obligations. By failing to comply with PCI standards, you both increase the risk of a security breach at your business and put yourself on the hook for any fraud losses that occur as a result of your negligence. Even if you successfully follow PCI standards and a breach occurs, your provider or bank may try to hold you accountable for the losses. However, your case will be much stronger if you can prove that the breach occurred on their end.


4. Choose a highly rated provider that fits your business.

© Depositphotos – Robyn Mackenzie

Once you've read “Fee Sweep”, assessed your business's needs, and studied up on your security obligations, you're ready to choose a provider. But don't just sign up with the first payment processor you like. The most surefire way to guarantee yourself low rates is to get three to five processors vying for your company's business. Credit card processing is as competitive as ever, and agents often have plenty of leeway to lower their costs if it means landing your account for the long haul. If agents know that they're working against other agents, they may also move more quickly to bring you on board under conditions that are favorable to you.

The CPO homepage has a useful tool to help you narrow your search to highly-rated providers specializing in your industry. All “A”-rated providers offer transparent pricing, low-commitment contracts, and positively reviewed customer support.


5. Provide full disclosure during sign-up.

The merchant account sign-up process can sometimes feel tedious and invasive. Just as you researched your provider, your provider has to look into your business to make sure you are a good fit for them. They may ask for a profit and loss statement, bank statements, or even photographs of your location. You may hear that your application is tied up in “underwriting” for a few days. It is tempting to push back on these requests or misrepresent your business in order to speed up the process, but try to be as patient and as honest as possible. If a merchant account provider asks you to supply information about your business, it's because they absolutely need it—remember, they also want you processing through them as soon as possible.

The consequences of misrepresenting your business type, processing history, or expected sales can be dire. When a provider brings your business onboard, they take on a certain amount of legal risk. Some providers have even been prosecuted by the federal government for facilitating legally questionable payments. As a result, providers are incredibly cautious when it comes to irregularities in your processing activity. If you they detect that you've started selling undisclosed products or ripping off your customers, they won't hesitate to freeze your account, hold back a cash reserve, or even terminate your account. In extreme cases, your provider could place you on the TMF/MATCH list, an industry-wide blacklist that precludes you from opening an account through most other processors. When it comes to your merchant account, honesty from the start is truly the best policy.


6. Communicate about changes to your business.

The road to the perfect merchant account doesn't stop once you're signed up. If you don't communicate certain information to your provider from time to time, your relationship with them can deteriorate in a hurry. Specifically, you'll want to let your provider know in advance if you expect an abnormally large sale, a sharp increase in sales volume, inventory additions that are outside of your normal specialty, new markets for your services outside of your home country, or a change in ownership at your business. Essentially, you'll want to give them a heads-up before any abnormal processing behavior or major changes to the structure of your business. As long as your provider knows what's coming, it can find a way to keep your money flowing smoothly.


Don't skip steps!

When it comes to merchant accounts, doing it right is better than doing it fast. A good merchant account is worth waiting for when you consider the money and frustration you'll save in the long run. Here at CPO, we've done the legwork to help you sort the good from the bad; the rest is up to you.

To get started, download your copy of Fee Sweep today!

Reader Comments

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1 User Reviews

  • Debra

    I had no idea how complicated it was to open a merchant account until I read this article. It’s scary to think that there are still providers out there trying to scam merchants. But I appreciate the six steps provided to find a trustworthy merchant account provider. I’ll definitely be doing my research and following these steps to ensure I don’t fall victim to any scams. Thanks for the helpful advice!

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