Merchant Accounts & Credit Card Processing

As a retail merchant, you should know what you're doing when it comes to choosing a merchant account provider and a Point Of Sale terminal solution. Selecting the wrong merchant account provider can mean paying high priced leases on a terminal your business doesn't need, and even paying high monthly fees. Don't be caught by surprise!

The purpose of this guide is to help you get a merchant account and aid you in selecting the right terminal for your business needs. Let's get started...

Step One: Understanding Retail Merchant Accounts

Before you can start looking for the right merchant account provider, you need to know what a merchant account is and what it does.

A merchant account is a special account that is set up for a business to accept and process credit card orders. After a customer swipes their credit card through a terminal, the information is passed securely to a processing bank. The processing bank makes sure there is enough available credit in the customers account, and if so, they then deduct the appropriate funds from the account. If there are not enough funds, the card is rejected and a message is displayed on the terminal read-out screen. Assuming the funds are available, the money is transferred to the merchant's business checking account within 2 to 3 business days.

In addition to checking for available funds, the processing bank also makes sure the card has not expired or wasn't reported as lost or stolen. If either of these are the case, the transaction is immediately halted.

Step Two: Preparing Your Retail Storefront

Before even starting to look for a merchant account provider (or perhaps when you've just started to look), it is important to know where you want to place your credit card processing equipment.

Here are some aspects to consider when deciding where to place processing equipment:

1. Customer access to terminal
If you plan to accept debit cards, customers will need to access your terminal (or PIN pad) so they can enter their PIN.

2. Ease of processing access
The faster the better, customers are an impatient bunch and expect speedy checkout times. Having a terminal located halfway across the store won't accomplish this task.

3. Access to telephone jacks
Terminals will need to be placed close to telephone jacks for connection. Have your local telephone company install jacks where you'll be placing processing equipment.

4. Size of equipment footprint
Do you want an all-in-one integrated terminal solution or separate equipment? More merchants desire a smaller footprint, to conserve countertop space, and tend to choose integrated equipment.

5. Purchasing a second phone line
In most cases, you'll want to purchase a second phone line from your local telephone company to connect your terminal to. Tying up phone lines when processing transactions can cost you sales. You're in business to bring in sales... not lose them.