They say everyone has a great business idea at some point in their life. The question is whether you choose to take the plunge and pull that concept into reality.
Whether the business is a brick and mortar Polish bakery, an independent taxi service, or a mobile pet grooming service, it is yours. Or perhaps it’s a digital business that provides covers to indie authors, an online game, or even a custom photo album producer.
Any way you look at it, the business is more than just an idea and it needs to have a tangible business plan to make that work.
One of the first things you’ll have to figure out is how to accept payments. If you have a physical store you can always accept cash and checks, but online, you are limited to some sort of card payment.
Even if you don’t have an online presence, you’ll want to accept credit cards.
Why would you want to do that?
70% of the United States carries at least one credit card. The world is moving closer to a universal, cashless society. While it might be nice to jangle some change in your pocket, your largest revenue stream will come through plastic.
You’ve decided to start the business. You have taken the step from an idea to putting that business into practice. You’ve drawn up a business plan, lined up a couple of investors, and rented a storefront to sell books and organic coffee.
You’ve lined up vendors and have inventory on the way.
But how do you ensure that your customer’s money is making its way into your bank account? The next step is establishing a merchant account.
Simply put, a merchant account through a credit card processing company is an intermediary between the customer’s credit card company and your business account at the local bank.
When a customer at your coffee/book shop swipes, inserts, taps their card the credit card company fronts the money. It travels to the processing company and once it is approved by the credit card company it hops into your bank account.
How do you find a merchant account?
That part is fairly simple, especially for a small business. There are thousands of credit card processing companies to choose from.
You shop around. Look at who will offer you the best deal. Be careful to look at all the fine print and determine how the account will impact your revenue stream.
Like everything in life, it takes money and hard work to make money.
There are several items to look at when choosing your first processing company. Rates and fees, security, and support are atop the list, but there are several other important factors.
In the beginning, rates might be the most important as your goal is to establish a steady revenue stream with the greatest probability of growth. As you approach the threshold this may change.
You may find tendencies in your clientele’s credit card purchases that warrant a change.
Wrapped up with the rates are the fees. Each processing company will offer variations on the monthly fees you’ll see on your statement. Make sure you understand what you are getting into.
Security is another factor you need to take seriously. With credit card fraud a real challenge in today’s business world, the processor needs to provide strategies that fit your business model for protecting you and your business.
The last item you should look at is customer and tech support. The last thing you want is a company that only works 9 - 5 and leaves you in the lurch if your machines go down on a Saturday night.
Ultimately, you want to find a company that provides you with the above checklist, while easily integrating with your registers quickly and effortlessly.
Once you’ve settled on a processing company, you’ll have to run through the KYC process. This is a universal procedure to help prevent money laundering and protect the company.
Just like most interactions with the government, the KYC was put in place to validate your identity. They want to make sure you aren’t funneling money to terrorists or organized crime.
When you go through the KYC process you will have to provide the banking institution with some basic information: owner names, business addresses, social security numbers, tax IDs, etc.
While the process is mainly to protect the processing company from legal trouble, it can also help them get to know you and your business a little better.
Their knowledge can be your gain. By understanding the business you are bringing to them, they can better help you pick a merchant account that fits your business type.
Many aspects of a contract are negotiable and many companies will work with you as they attempt to win your merchant account over their competitors.
When you sign the contract for your merchant account for a new business, you’ll probably be on the lower end of the $30k threshold.
Why is this number important?
When you are running less than $30k in monthly credit card transactions you will find that most merchant accounts will be interchangeable. You can pick the processing company that offers you the most agreeable terms.
At this point, you want to be looking for the credit card processor that offers you the largest revenue stream.
However, when you reach that $30k threshold, your priorities change.
Once you hit this mark you want to work with a processing company that understands your business model and goals.
At this point, you will find that different providers offer different strengths to help you achieve those goals. By having the background and know-how to ensure that your individual needs are being met monthly.
This number comes into play because once you hit the threshold your business technically slips into the realm of high risk. This means you have different priorities.
Under the $30k mark, you are focused on building the business and establishing a steady revenue stream. Beyond that, you are looking to maintain and expand.
The moniker high risk merchant account carries a negative picture. However, this is not exactly the case. High risk simply means some added risks need to be taken into account.
While this may affect the terms of your contract, it doesn’t mean you will suddenly cease to turn a profit. This means the processing company is taking steps to protect you and themselves.
The biggest challenge when increasing your business is that statistically, you will increase the number of chargebacks you will face every month.
There are many pieces to a business shifting into the high risk category. If your transaction total is the only piece, the processing company is usually willing to work out a contract that works favorably for both parties.
If you are like most small business owners, you don’t want to have to worry about the intricacies of all your credit card transactions.
You want to find a processing company that works quickly and efficiently, leaving you to focus on how to improve and grow your business. But, you want to do this safely.
Not all credit card processing companies are created equal. And don’t forget, they are also businesses whose goal is to turn a profit.
When you are starting, it is wise to shop around. Look at what different companies can offer you. Perhaps even look ahead and see if different companies have a track record of working with your type of business.
Don’t jump into bed with the first company that wanders along. Find what fits.
Look into companies with proven track records and be wary of companies with offers that seem too good to be true. Remember, there’s no such thing as a no-fee transaction.
Companies making the kinds of offers that make them drastically stand out, often are doing so at the expense of your business, and as a small business, you can’t afford that.
At the end of the day, you need to find a company that will work with you to promote your idea and help build it toward the future. Having a full understanding of what you are trying to accomplish is the first step in making a quick, safe, and secure decision.
A credit card processor like Easy Pay Direct might just be the solution to your search. With a variety of options and a desire to build relationships with their clientele, Easy Pay Direct could have the perfect merchant account to get your business off the ground.
Whatever choice you make as you look to establish your business, you need to make sure you are keeping the future of your business as your guidepost.
Making the right choice at an early stage can help keep your business on the right track later.