MERCHANT ACCOUNTS

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(Merchants that have never had a merchant account before should ensure that they get all the necessary information before they apply for a merchant account. The following helps explain exactly what a merchant account is, and how it can help your company. Beware of providers which do not offer information about their service, and never sign a contract until you are ensured that there are no hidden fees. To find out more, contact us here, or check out our Frequently Asked Questions section.)

A Merchant Account is a bank account from which funds are collected from credit card purchasers (your customers) by a bank and then disbursed to the merchant that holds the account. Banks often define Merchant Accounts in a similar manner to that of a simple loan. This means they underwrite a Merchant Account's issuance in the same way they do a loan, requiring applications, supporting documentation to prove a business exists, and acceptable services/products and good credit.

Some non-banking institutions are more liberal when issuing Merchant Accounts, and require less documentation for approval. CCPS works with both types of institutions to ensure its customers get the best array of choices as well as lowest costs.

Typical Charges

Using a merchant account is not free. In general, typical merchant account charges include a percentage of sale (known as a "discount rate", around 1.5%-5% of total) and a small transaction fee (25-50¢) for each purchase. Although some competing providers may make claims that no fees are charged, this is usually incorrect. Avoid these operators, as you may find yourself subject to hidden fees.

How The Processor Works

With a merchant account, your credit card processing company acts as an intermediary between the purchaser and you. The process starts when the purchase request is made by the purchaser, follows with fund verification, transfer of funds to your Merchant Account, and concluded by the confirmation of a successful transaction to both the purchaser, and merchant (you).

No Fees… Is This Possible?

In most circumstances, no. Providers who claim there is no "application fee" or other fees generally should be avoided. Companies like this typically hide their fees, and once the contract is signed, send you an invoice for "miscellaneous costs". CCPS is one of the few companies in the industry to offer a completely transparent application process, ensuring you are aware of all fees before you sign.

Online Payment Services

There are a number of companies that have sprung up in the past 5 years which offer online payment services specifically to Web-based businesses. In many cases, these services offer the services of both a merchant bank and a credit card processor.

A word of warning about these services, however:

Their fees can often be incredibly high. In some cases, from 10% to 30%. With this particular model, they can obviously afford to take both good and bad merchants onto their books, all while maintaining extremely high profit margins.

These particular companies generally protect themselves from bad merchant liability by limiting the monthly processing amount available to their customers. This is important mainly because with these companies, once your limit has been reached, you can no longer process any orders. Obviously, this could mean a dramatic sales loss during a particularly good month.

Final Note

Unless you are involved in a risky industry such as adult or gambling, it is always best to avoid high-fee online payment services. If your business is in good standing, it is quite likely that CCPS can provide you with an online credit card processing solution at drastically reduced rates. Contact us here to find out more.

Before you make a merchant account or credit card processing decision, we recommend you contact us, either via our toll-free number above, or through our quick contact form here.