If you are a new business owner or a first-time applicant of a merchant account, the process might be a little confusing and daunting. Merchant accounts have tons of information that you need to be aware of and most people who apply for one tend to overlook or neglect this information. Fortunately for you, below is a summarized guide to applying for a new merchant account. Merchant accounts are very essential and hold a special place in every business' success. With the numerous competitors out there, having a specialized account is one way to gain an edge over them. They make it convenient not only for the business owners but for the customers as well, increasing productivity and more importantly, profitability.

These days, there are numerous merchant account providers battling for their clients. They are highly competitive and flexible because they are willing to abide by your requests just so they can get you in contract with them. The competition among these providers can be used to your advantage. Try to find as many providers as you can and have them quote your business. Let each provider know what his other competitors are offering you so you can score lower processing rates and fees. Providers can adjust their fees for you just so they can get ahead of their competition.

Different providers have different ways of conducting business; therefore some of them will have a contract term while some of them do not. Inquire about how long the contract would be and the amount you have to pay if you cancel before the end date. Some merchant providers offer a month-to-month term which do not require a cancellation fee. Do not narrow down your options to those which do not have a required term and a cancellation fee. More often than not, providers which have longer contract terms are the ones which can lower down their rates or provide several pieces of equipment for free. Although there are some things that you always should keep in mind when you do decide on applying for a merchant account with a contract term, some of these are: the auto-renewal and the increase in rates and fees. Some merchant accounts have in their contracts a clause which states that the term will be automatically renewed once it expires, therefore, to avoid getting stuck with a provider and paying for a cancellation fee, make sure that you call this issue out. Regarding the increase in rates and fees, make it a point to ask every provider about when their rates and fees increase. Often times, there is no guarantee that the rates and fees you agreed on will stay the same for the rest of the term. So, make a conscious effort to read the notice about them which is usually stated on your monthly merchant account statement.

During the search for your merchant provider, create a list and compare all aspects and fees of the different accounts. Discount and transaction fees do makeup for the majority of credit card processing expenses; however, there is a need to pay all other fees. To guarantee that you avail of the lowest rates and charges, take your time in comparing the rates offered by providers. Some differences might be too little to scrutinize but there would also be some that would vary greatly. When it comes to equipment, you have to know that they aren't that really expensive. Yes, a new one may cost you $400 but these are already excellent terminals with thermal printers and other features necessary to carry out transactions. If you feel like you need a more enhanced system, there are wireless terminals and other advanced equipment that may be a little bit more expensive but still are very useful. Furthermore, some providers would even provide you the equipment for free until the end of your contract.

Applying for a new merchant account requires you to declare your processing volume and average number of sales. This also applies to merchant accounts for small businesses. Merchant accounts require this information because they need to assess your risk. If you do not have sufficient history yet because you are still a new business, you can discuss your situation with your provider and work together for a realistic set of numbers. Once you start using your terminal, the amount you would be paying is determined by the types of cards you accept. Credit cards that charge a higher rate are business or corporate cards, rewards credit cards, government cards and foreign cards.

Chargebacks also consequently charge you higher rates. This occurs when a customer disputes a transaction. When this happens, it is important that you respond to it immediately and that you do not go beyond the allotted time given to you to fix the problem. If the allotted time is over and you haven't fixed the problem, the customer wins the case. Chargebacks can be very expensive and if you have a lot of them unresolved, it may lead to your account being terminated.

There is a lot of information that you need to know before finally applying for a merchant account. Make sure that you know a thing or two about them to ensure that you are not overlooking any important detail and receiving surprise bills. Also, make it a habit to scrutinize your account statements to make sure that everything is correct and is charged to you accordingly. With this information, you can now create an online merchant account without worries and uncertainties.

Author Bio
Justin is a business analyst who specializes in technology. Solving business challenges is his passion. He helps online businesses and merchants to expand using secure merchant processing solutions and by taking effective business decisions in order to control costs and improves efficiency.