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How to Choose the Merchant Account Provider

Questions you need to ask every card processing provider

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Congratulations! Your e-commerce business is all set up.

But now that you have your products or services online to purchase, you need a way to get paid through the most popular payment methods at this time – Visa and MasterCard.

So you need a way to accept credit card payments and apply for an ecommerce merchant account. Which merchant account services should you choose? There are tons of providers you can work with, but before choosing your favorite there are things you need to consider.

Let us discuss few points on choosing the »best« merchant account service provider for your business.

Checkpoint #1: Customer Support

Things happen. You never know when a small problem or bigger crisis will occur. Payments and uninterrupted cashflow to your business bank account are vital, so you want to make sure that you'll have someone to help you out at any time. Remember that you're running a business, and any downtime with your equipment or systems can mean less money for you and your business.

Whether you're able to call in or receive some type of help via chat, you should make sure that fast customer service will be available for you. The ideal situation would be to make sure that you have a dedicated account manager's contact who is available for you at any given time.

At MerchantScout, we assign a dedicated agent to you as soon as you fill out the application form, for no cost. Our agent is your first line of contact while arranging a merchant solution with one of our acquiring banks, and providers you free ongoing 24/7 support as long as you keep processing through the arranged solution. We never let you feel as if you're dealing with a big corporation and being just another client in a row, instead our focus is on long lasting relationships.

Checkpoint #2: Do your Due Dilligence

If you Google »merchant account services«, you'll most likely be overwhelmed by the results showing all the different providers for accepting card payments, either for ecommerce, MOTO, or High Risk merchants. It is important that you know who are you applying with.

First, you need to find out if you're applying for a Direct MID (merchant account directly with the acquiring bank) or Aggregate MID or Payment Facilitator MID (more merchants share a single MID).

Try to get the answers to following questions: Are you working directly with the acquiring bank or a middle-man Payment Service Provider company (PSP)? Where is the provider and acquiring bank based? Are they EU/UK regulated Financial Institution and have their own PCI compliant gateway? Do they already process payments for other businesses in your niche? Can you find any complaints online?

Checkpoint #3: Rates and Fees

Usually this is the focus point of any merchant account application and the first question you'll be asking your provider.

Please see Rates & Fees and Interchange Rates Explained for more information.

You should know that for all EEA (EU/UK) based companies, doing business within EEA, the EU Commission has lowered the interchange fees down to very low numbers (0.20%-0.30%). On top of interchange fees, the Card Scheme Fee and Acquirer/Provider's margin are added. The most transparent and »fair« way to be charged for your captured card payments is the interchange++ rate model where you can clearly see a breakdown of exact interchange, CSF and margin. Typical rate is Interchange++1.00%; or 2-3% blended.

Make sure you ask about all other fees upfront as well: Fixed transaction fees - are they charged for declined transactions as well, are there any contract cancellation fees, minimum monthly invoice, how much is the setup fee and if it has to be paid upfront, is there any additional annual and monthly fee, how much will you be charged for every statement and bank wire, and very importantly what are the chargeback, retreival and refund fees.

Checkpoint #4: Payout Times

You may know that you will get your funds but you also need to know when exactly.

Every credit card processing provider and acquiring bank will have different remittance turnaround times. It mainly depends on your risk category and the type of merchant account setup – for example, a direct MID setup where acquirer is paying you directly means less time because there's no need for funds to reach the Processor company first and then be forwarded to your bank account.

Typical payout terms you can expect are either daily or weekly, with 1-7 day delay time for each. In many cases a daily payout with very short delay will be granted only if you are assessed as low-risk, or most usually after you spend processing with the provider for couple of months and have enough volume to support that.

Checkpoint #5: Contract Terms and Periods

Don't be surprised when you'll see that every provider wants to impose a Rolling Reserve to your account. This is a standard measure to lower the risk exposure of provider in case of excessive chargebacks or refunds. Typical Rolling Reserve is between 3-10% for the period of 90 or 180 days. As with payout terms, keep in mind this can be negotiated, especially after your company spends couple of months processing payments with the provider.

Also, chances are you won't need to cancel your contract with your provider, but should you need to, it's vital to know when your contract ends. Most providers do not require you to be obligated to any minimum contract length periods, but be sure that you ask.

Checkpoint #6: Integration

For any ecommerce business the shopping cart is the most important piece of the puzzle. So you probably aren't willing to change the software and you want to ask the provider how will you be able to integrate with their payment gateway.

Many providers will have pre-made plugin modules for the popular shopping cart applications, ask them if they have one for yours because this means you can be integrated with a click of a button.

Alternatively if there's no plugin available every provider will give you their gateway integration API guide. You'll then need a help from a moderately skilled developer in order to integrate your website with the API. Good to know - outsourcing such job normally costs around 200-500 EUR.

Some providers will not allow/support to integrate with the method where you can use own payment page and the clients stay on your website. They may allow only the use of their hosted payment page, meaning your clients are redirected from your website to their secure payment form and then back to your »Thank You« page. If you don't prefer that, we strongly advise that you ask your provider if Direct API integration is supported, before you invest your time and money into the application process.

Choosing the best merchant account provider

Like anything else, you'll need to do a lot of research before you choose your new merchant account home. You don't want to choose the first provider and not the cheapest either.

Doing your due dilligence and asking all above questions will save you from trouble afterwards and make sure the solution will fit with your business.

MerchantScout has over 10 years of experience in the field and we're working with dozens of time-tested acquirers and payment providers. If you're looking for the modern, high quality service for your business, contact us today.

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