Despite the growth of online purchasing, many consumers still prefer the security of using their credit card over the phone, or with a mail-in order form. If you’re the one to provide these tested payment options, you open yourself to a vast amount of business that other merchants largely ignore.
However, as with every kind of payment solution, accepting credit cards by phone or mail has its pitfalls. Here are some tips to help you get the most out of your merchant account.
Know your fees
It’s important to know how, how much, and why you’ll be charged ahead of time in order to budget effectively and avoid unpleasant surprises later on.
There are basically four different kinds of charges that vary for each merchant account: Fixed, regular fees are usually monthly and sometimes annual. Fees based on sales come in the form of a small percentage of the amount of each transaction, plus a fixed cost per transaction.
You may also be assessed a one-time fee for such things as opening/closing/changing a merchant account, application fees, or cancellation fees. In addition, there are fees for special circumstances such as charge backs, or the use of debit cards or other special cards.
You should also ask whether the rate you have been quoted is the “discount rate” and whether you’ll qualify for that rate. The “discount rate” is the lowest possible rate that merchants are charged to accept credit cards. When there is a higher risk of nonpayment, you will be charged a higher rate.
Keep in mind that unfortunately, mail order and telephone order merchant accounts are considered a higher risk because the buyer and the credit card aren’t physically present. For example, most retail businesses are charged less than 2.00% on each transaction. If you are quoted a fee in this range, make sure the merchant account provider knows that you are a phone or mail order business. Be ready to pay a little more because of this.
Finally, ask if there are cancellation fees. The truth is, you have many options in setting up a merchant account, and there’s always the possibility that your needs will change in the future. If your merchant account provider requires you to be “locked in” to their service, you should seriously consider whether to do business with them.
PC vs. Terminal
In a mail or telephone order setting, you often have more choices regarding how to process credit cards than in a regular retail environment.
For example, you can process credit card payments either with a traditional credit card terminal, or by using your PC and specialized credit card processing software. There are advantages to both.
A PC gives you a lot of extra power to seamlessly link your credit card processing to spreadsheets or other programs to manage other aspects of the business: accounting and projecting profit-and-loss statements, tracking your marketing efforts, processing the fulfillment side of the order, keeping tabs on your inventory, and quickly seeing which items are the best sellers.
On the downside, a PC can take longer than a credit card terminal, and they tend to crash more often. Also, you’ll have to have your PC booted up and ready to process credit cards all the time-imagine getting a huge order over the telephone, only to keep your customer waiting while you go to the other room and boot the computer.
Setup a space
It pays to have a dedicated “cash register” space, even though your customers are never physically in your store. Having a dedicated desk means that when an order comes in, you’ll have everything you need to process the order at your fingertips, such as customer files, product descriptions, a credit card terminal, or a computer running credit card processing software.
If your orders are processed by different people, a dedicated space helps ensure consistency, so that everybody knows what everyone else has done.
If you run your mail order or phone order business out of your home, a dedicated work space is required for tax purposes.
Automate the “settling” step
Set up your merchant account long before you need it
Sometimes it’s possible to set up your merchant account in just a few days, but often it will take longer than that for everything to clear. You might get a pleasant surprise, but it can also take weeks before you can use your merchant account to accept credit cards. The last thing you need is to launch a new ad campaign, host a big event, or otherwise attract a wave of new orders-and be unable to process the credit card payments because your merchant account and credit card terminal aren’t fully functional yet. You can easily avoid this worry by setting up your merchant account a few weeks in advance
Choose the right bank for your merchant account
If you do business with a small, local bank, they may not have experience in setting up and processing a merchant account. Usually they will outsource your processing to a larger bank for a commission.
If you go directly to a bank that processes merchant accounts, you’ll save yourself time and money. Then, if you prefer to work with your local bank, you can always arrange to have your funds deposited into your account with the local bank.
Ensight Merchant Services is committed to making things run smoothly whenever you credit cards with a phone or mail order merchant account. If you have any questions, feel free to call us toll-free at 866-377-2292.