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Merchant account basics
By: Jack Chevalier, Tue Jan 10th, 2006
According to merchantseek,companies who accept credit card
payments for goods and services tend to generate higher revenues
than those who only accept cash. According to industry
statistics, the average credit card sale is $40 versus just $9
for the average cash sale. If that isn't temptating enough,
consider the disadvantage you may face if competitors offer
credit card payment options and you do not. These days, the
credit card payment option is a must, whether you have a
physical retail outlet, take telephone orders or sell products
over the Internet. Besides the potential revenue boost, credit
cards may well be a cheaper alternative to cash and checks. In a
case study it is found that, credit card processing costs
average 2.7% of any transaction, checks 4.0% and cash 4.8%.
These figures make sense when you consider how many times paper
money and coins must be counted and recounted by different
individuals. While each business would vary in that respect,
cash and checks still require more handling than plastic
alternatives.
Establishing a Merchant Account
To offer the credit card payment option, you need to set up a
merchant account-a bank account established by your company to
receive the proceeds of credit card purchases. Typically, along
with the account, you will also need to lease equipment and
software to facilitate the transactions and ensure payments flow
to your operating account. The process is slightly more
complicated if you wish to accept credit cards online. In
particular, you will need to sign-up with a payment gateway such
as Cyber Cash or Virtual Net. These services allow for real-time
credit card authorization for online transactions. It is
essential that the payment gateway you choose is compatible with
your software and financial institution so transactions flow
properly. Any number of financial institutions offer merchant
accounts, but you should look for a provider who has
demonstrated expertise in working specifically with small and
growing businesses. These organizations can often structure
accounts faster and at better rates than those who cater to
larger companies. As you shop around, you should also look for
institutions that work with customers to combat fraud and reduce
chargeback’s. And if you are conducting online transactions,
you will want to work with a provider who has expertise in
setting up and processing Internet merchant accounts.
About the author:
For more information on merchant services,please
visit http://www.paynetsystems.com<
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