Setting Up a Merchant Account: The Quick Guide
It’s a daunting task…or is it?
Merchant account setup doesn’t need be a hassle. Of course it may seem so, especially when you first dip your toes in the process, but with a little advice from the Maverick, you’ll be up and running in no time, and hopefully, without any stress.
I’ve broken the process down into phases for easier consumption. 🙂
Table of Contents
Phase 1: Research a Provider.
The obivous first step is for you to do some research. There’s nothing more costly and time consuming than ending up with a garbage credit card processor. If you haven’t already done a search for “merchant account” in Google, I suggest you do so now. I want you to get an idea of how many processors are actually competing for your business….thousands!
Sifting through all of them can take a whole day in and of itself. Your natural tendency will be to shortcut it, and just pick the first company you see, but I encourage you not to do that. Trust me, your bank account will be happy you didn’t. So crank up your favorite search engine, and get to work.
Compile a list of all the companies that look legitimate enough for you to pursue further. Some of them will look good on the surface, but the more you investigate, the more flaws you’ll find. If you want to know the signs of a good company, then check out my “About Our Reviews” page. It basically lays out my process for reviewing processors, which might come in handy during your research phase. You can also take a look at my merchant account comparison chart to save yourself a ton of time as well.
Once you’ve narrowed your search down to a handful of providers, you’ll need to put together your business profile so you can start applying for an account.
Phase 2: Setup Your Business Profile.
The business profile is pretty much self explanatory. It gives merchant account providers an idea of what kind of processing risk they’re dealing with, and how they should setup your account. There are a few key questions that you’ll need to answer when putting it all together.
- How do you intend to accept payments?
- How much volume do you plan on processing per month?
- What will be your average ticket price?
- Is your business seasonal?
How do you intend to accept payments?
Different business models require different methods of accepting payments. If you have a brick-and-mortar location then you need to think about getting an actual credit card terminal. If you process checks, then you’re going to need to inquire about that service as well. Same goes for e-Commerce shopping carts, wireless/mobile, restaurant and/or lodging accounts.
How much volume do you plan on processing?
Merchant account providers are going to want to know how much sales volume you plan on processing per month. If you’re a new business, try and guess how much you’ll be processing per month, within the first 6-months of operation. If you’ve been in business for a while, then chances are that you’ll already have this number ready.
What will be your average ticket price?
Another obvious question. You can figure this number out with some quick math (Total Sales Revenue/Total Number of Sales).
Total Sales Revenue = $100,000
Total Number of Sales = 300
100,000/300 = $333 (Average Ticket Price)
Is your business seasonal?
One aspect of business that most merchants forget about is seasonality. A travel company is usually seasonal, so there will be obvious periods of high and low volume. Some merchant service providers offer seasonal downtime, which can help you save money during those slow months. Don’t forget to inquire about it.
Phase 3: Apply.
Once you have your busines profile together, it’s time to apply. Go back to the handful of providers that you picked, and apply to all of them. It might seem like overkill, but trust me, it’ll give you a great bargaining chip to play these guys against each other. Which brings us to our next topic, Negotiation.
Phase 4: Negotiating Terms and Rates.
Merchants often get so overwhelmed by the application process that they forget to negotiate with their sales rep. They just want to get it over with, so they can get on with their lives, but promise me that you won’t be one of those people.
Sales reps can be annoying and pushy, but you need to understand that they need you more than you need them. There’s so much competition between these providers that they’re more than willing to negotiate with you in order to get your business, but you’ll only benefit if you actually try. So, I want you to swear to me that you’re going to be the one who’s pushy and annoying, not the other way around.
There are a ton of great books on negotiating that you can read to brush up on your skills. Here are a few of them:
- Bargaining For Advantage by G. Richard Shell
- 3-D Negotiation by David A. Lax and James K. Sebenius
- The 4-Hour Workweek by Timothy Ferriss
- I Will Teach You To Be Rich by Ramit Sethi
I’ll be publishing a comprehensive guide to negotiating merchant account fees here pretty soon, so stay tuned.
Phase 5: Setup Payment Gateway and/or Terminals.
Once you’ve negotiated your way into a sweet deal, it’s time to setup your account. If you own an online store, you’re going to need to integrate your merchant account solution with your shopping cart through a payment gateway. Most major shopping carts like Magento Commerce, Interspire and OSCommerce have either base integration capabilities or have community plug-ins that make it easy for you to get setup. Each shopping cart and payment gateway combination setup is going to be different, so this is where you’ll have to work with the support teams of both of those companies. It’s definitely not brain surgery though. If you need help setting up your gateway, feel free to contact me, and I’ll be happy to help.
If you’re running a brick-and-mortar shop, you’ll have to setup some credit card terminals. Usually MSP’s offer you their own tech’s to help you get setup, especially if they’re local. So, you might want to consider that during the research phase. Having a local company process your payments is not only great when it comes time to setup your terminals, but they’re also nearby should you need to them quickly.
Conclusion: Watch it like a hawk.
Setting up your merchant account is only part of the process. Once you’re setup, I highly recommend that you keep a close eye on all your transactions and fees. Also, find a good support rep at the MSP you signed up with, and form a close relationship with that person. Having an ally within the company will be of tremendous value.