Many people ask this question. These services for credit card processing are growing in popularity, but you don’t have to be part of any large company to reap the benefits.

There is one rule for credit card processing: Before accepting Credit Card payments for goods or services, you must have authorization from your merchant account provider.

The rules can also differ depending on the Credit Card Processor that you choose. Some processors will require that you have a Merchant Account to process Credit Cards. Some processors allow you to use their service by buying terminals from Authorized Dealers, or online sites like eBay, Overstock, and others provide Credit Card Processing capability directly for consumers via Credit Card Processing Apps.

There are other Credit Card Processors out there that will allow sellers to accept Credit cards without having to open merchant accounts. What happens once you have received your money? Do you really need one if the Credit Card Processor does not offer a Merchant Account?

Here is where things get tricky. The Credit Card Processor might pay you directly to your personal bank account or they could deposit the funds into an external account (usually set up by the Credit Card Processor). The Credit Card Processor will then transfer the funds into your Merchant Account. You can then deposit it into your bank account or use a Credit card with Rewards to purchase supplies or inventory from suppliers. You could incur fees that cut into your profits or incur additional Credit Card Processing expenses that the Credit Card Processor isn’t covering.

Credit Card Processors offer Credit Card Terminal services. This is especially true if they are not tied to Merchant Account Providers. There are Credit Card Processors who will only act as Payment Gateway. This means that you can accept Credit Cards via your website, but not using any physical terminal.

There are also Credit Card Processors such as PayPal. You can access credit card processing capabilities without the need for a merchant account. This is their greatest selling point, as it allows them to maintain their large consumer base, even though they have no direct ties with the Merchant Services Industry. You don’t have to open a Merchant account in order to process Credit Card transactions. There are other options.

Are all merchants that take credit cards registered with a merchant account?

The short answer to this question is yes. Merchants that accept credit cards must have a merchant account. Merchants have the option to share a merchant account or open their own. A dedicated merchant account is required for any merchant that generates more than $100,000 annually.

Syndicators, also known by 3rd party processors and payment facilitators (payfacs), provide shared merchant accounts. A merchant account can have many businesses. Stripe, Square are some examples of aggregators. It is easy to sign up for aggregators. All the functions are self-serve. Many small businesses who process less than $100,000 annually use aggregators. Aggregators have two major drawbacks. First, the fees can be much higher for larger businesses. Second, the likelihood that your funds will be held is higher, and third, customer service levels are lower.

Payout processors are also known as acquirers and ISOs. They provide merchant accounts for businesses. It can take up to two days for acquirers to assign a merchant account. Your rates, hardware and software will be tailored to your business. Additionally, our customer service levels are better. Clearly Payments focuses exclusively on dedicated merchant accounts. A dedicated merchant account is a smart move for businesses with over $100,000 in annual revenue.

What types of merchant accounts are available?

Two types of merchant accounts are offered by most companies: high risk and mid-Low risk. Mid-Low is the most common category. There are usually fewer customer disputes (charge backs) per month with this type of merchant account than there are for High-Risk businesses like adult entertainment and grant writing. These are just a few of the factors that will determine whether a business is in the High-Risk category.

Type of products that you sell (e.g. What type of products you sell (i.e. Do you get 2 or more chargebacks per month? If the Credit Card Company considers your business high-risk, they may refuse to allow credit card processing services for you.

A Merchant Account is required for credit card processing if your business processes Credit Cards online. The reason why is because charging Credit Cards Online is considered an “Online Transaction” and if accepted by Visa/MasterCard/American Express/Discover require that this non-face-to-face transaction be processed through an Online Gateway which uses a merchant account.

How do I open a merchant account?

There are many companies that can help you get a merchant account, or to switch your merchant services provider.

Online search is a great way to find merchant service providers. It is important to select the right provider for your business. You should look for a company who can offer both e-commerce solutions and different credit card processing services. Balanced Processing Partners can help you explore your options for credit-card processing.  Contact us via email [email protected] or by phone 800 354-6256 for more information.