How to get a Merchant Credit Card Account
PERSISTANCE
First, you have to be persistent. Many banks will not allow "home based" businesses to get a merchant account because they have been burned so bad in the past by these type of businesses. You may have to go from bank to bank. If you live in a state that has Savings and Loans you could try there. This is what we originally did. Also, some credit unions also set up merchant accounts as does Costco and Sams Club. You may have to find a financial institution that is hungry and looking for merchant accounts.
To qualify you have to have an actual office. You can't be running your business from the kitchen table or a corner of the bedroom. You will be inspected as this is required by the credit card company. You also have to have been in business over 1 year or they won't even talk to you. This is your first priority. They will need a basic financial statement, credit report, and estimated average of charges on a per charge and per month basis. Your personal credit rating is the most important factor, so don't be suprised if you are turned down, over and over if your credit rating isn't good. This is where incorporating can help you as your personal credit isn't as important as the corporation's credit.
EQUIPMENT & PROCESSING
Your financial institution will require that you either purchase or lease a terminal and printer. New terminals run between $325 and $600 and all units today have a built-in printer. Wireless equipment usually starts at $1000 and runs up to around $2000. Wireless coverage for these units is still very spotty so I recommend a conventional wired unit located in your home-office. Used and reconditioned equipment can be purchased for as little as $100. Check out businesses that are closing. You can often get fantastic deals on terminal equipment from them. The credit card industry no longer uses manual "imprinters" except as a backup system. All advertising and startup supplies are given to you by the credit card companies or your merchant services company. You should not have to purchase anything except the terminal. If you process the client's credit card at their home, you may want to call the authorization center and get an authorization number right then or you can run the credit card when you return to your office. The credit card companies will NOT accept any charge today without an authorization number. This is for fraud protection. Merchant services companies now have software for your PC so that you don't have to purchase a terminal. This would allow you to process charges from a lap top connected to the Internet. This software runs over $400, so you might as well purchase a separate terminal unit. Quickbooks also offers credit card processing.
FUNDS TRANSFERS AND DISCOUNT RATES
Funds from credit/debit card transactions are transfered electronically from the customer's account to your checking account daily when you "batch" the daily transactions with your terminal. This eliminates running to the bank to deposit card transactions. The deposit will usually hit your account within 2 business days after you transmit your batch. The discount rate (normally ranging from 1.5% to over 3%) will vary depending on the volume of business and your credit card processor. This discount rate, transaction fees ($.10 to $.25 per transaction), and any other fees are deducted once a month from the bank account that the funds are transfered into.
CHARGE CARD MARKETING COMPANIES
Do not even answer the ads for "Take Credit Cards for Your Home Business" as most of these are scams and a total rip-off. They will try to get you to pay upwards of $1000 or even more for the same thing you can get for a modest charge in your local area by just being persistent. Most credit card processors will charge a one-time setup fee, but this is negotiable and may be waived in some instances.
DISCOVER, AMERICAN EXPRESS, DINERS, JCB CARDS
Many merchant services packages now include Visa/Master Card, Discover, American Express, Diners, and JCB within the paperwork. In these cases, you will be able to take all these credit cards by only filling out one simple form. The merchant services representative can answer all your questions. If the merchant service company you are talking to doesn't offer a complete credit card package, you can contact First Data Merchant Services to get set up.
TAKING PAY PAL IN LIEU OF CREDIT CARDS
Some pet sitters also use PayPal for payments. The 2 advantages of using PayPal is that using PayPal doesn't require any initial outlay of funds and the payment is secure with no chance of fraud. This payment system does require that the customer has a PayPal account and you can either request payment from his account or he can send you the funds. This is accomplished over the Internet and delays can be great because customers will not necessarily pay on time or don't have the funds already in their PayPal account. If the funds are in his account, then you get your money in minutes. Transfering your funds to your bank account can take up to 5 business days, much longer than conventional credit card processing.
You must also set up a commercial account with PayPal. If you try to use a "personal" account for business transactions, PayPal will force you to open a commerical account so you might as well get a commercial account right away. The discount rate is 3.5% (higher than regular credit cards) and PayPal takes their discount right off the top before funds are sent to your account. PayPal offers a free debit card on all commercial accounts so that you can access your funds instantly instead of transfering funds to your bank account (see above) by making local purchases or at any ATM. ATM transactions do incur a transaction fee, so use the card for purchases and get a cash-back at the same time thus avoiding ATM fees. It can take up to 2 weeks to get a PayPal commercial account set up and another 2 weeks to get the debit card. Contact Pay Pal at www.paypal.com for more information.
If you follow these simple steps, you too can take credit cards.