If you’re the founder of a startup, you’ve got a lot on your plate. You’re probably running most of the business entirely on your own and, in all likelihood, you have a list of to-do’s longer than your arm. Unfortunately, not many first-time entrepreneurs put much thought into their payments system. Most opt to partner with their bank or select one of the many quick setup systems; it’s only natural that busy entrepreneurs would choose the quickest, easiest option.
If you’re the founder of a new business or tech startup, you’ve got a lot on your plate. You’re probably running most of the business entirely on your own and, in all likelihood, you have a list of to-do’s longer than your arm.
If setting up a payments system is on your list, you’ve come to the right place. Unfortunately, not many first-time entrepreneurs put much thought into their payments system. Most opt to partner with their bank, tech companies often choose Stripe without thinking of the costs associated, or select one of the many quick setup systems; it’s only natural that busy entrepreneurs would choose the quickest, easiest option. Swipeusm offers this service at no charge, and will find you the best solution for your unique business at the lowest costs.
These quick options aren’t bad. In fact, they’re really good at what they do. However, entrepreneurs who pursue these routes quickly discover that credit card processing eats up a lot more revenue than they thought it would. When I present at conferences, business owners always find it shocking that the fees associated with accepting payments are often the second highest operating expense behind payroll. However, this money never hits your bank account and so it is not easy to track. Paying 2.9% and 30 cents per transaction adds up really quickly, especially when you’re trying to get your business off the ground.
If you’re working to set up your first merchant account to accept electronic payments, and don’t have processing history it’s best to take the time to evaluate a variety of options. It is very frustrating when your first application gets denied, but we can help. Finding a solution that fits your business at a reasonable rate can be the difference between a thriving startup and one struggling to stay afloat.
Here are a few steps you should take when opening your first merchant account:
Before you can decide on a credit card processing provider, as a business owner, you first need to understand what your business needs. This will also help you get through underwriting from a merchant services acquirer or payment processor. Here are just a few questions that will have a big impact on the processor you pursue:
Before you start seeking out a payment processor, it’s important to know the answers to these questions. Use them to create a summary of your business that you can show to processors. By knowing what features you require, it’s much easier to weed out providers who won’t meet your needs.
Unfortunately, the payments industry has made finding a good processor a veritable obstacle course. The biggest issue with the industry is that salespeople for most organizations are commission-based. It is also difficult to figure out who the best options are, as there are many types of distributors including: Payments ISOs, Payments Agents, Acquirers, and referral partners. This means that providers often aren’t concerned about selling you the right solution at the right price. That’s why your business summary is so important. If you don’t know exactly what you need, processors will sell you whatever they want at a price well above what you need to pay.
Don’t be afraid to shop around, it’s actually a must if you hope to keep this account for many years without speedbumps. Choosing a suitable merchant account provider is crucial, as there are dozens of providers waiting for your call and one of them is bound to fit what you want. As always, a good place to start is by reading customer reviews and contacting those who offer customized solutions. In all likelihood, you’ll find a group of three or four processor that fit you pretty quickly. Your decision now should come down to price – leverage quotes against one another to get that perfect solution at the lowest rate possible.
Once you’ve found your processor or had Swipesum create a proposal for the best options for your business, it’s time to apply for a merchant account. The first step in opening that account is submitting your merchant application, which is essentially an agreement between you and the processor that establishes rates, duration of the partnership, and other terms.
Like many other legal agreements, a merchant application will be full of complicated language and fine print, some of which could have major repercussions for your business. Despite their complicated nature, you’ll find that merchant applications are pretty easy for you to fill out. You’ll only need to provide basic information about your business and ownership.
One of the most important pieces of the application is the pricing section. Whatever you do, never sign a merchant application that requires tiered pricing. Make sure that processor rates do not increase based on the type of card used. It’s important to understand the difference between processor rates and interchange rates. Interchange is the cost of completing a transaction for your processor, so high-rewards cards have higher interchange rates. Your concern is whether or not your processor’s rate (the margin charged above interchange, often referred to as processing fees or markup fees) increases depending on the type of card.
If you’re having trouble with your merchant application, take a look at our article outlining how to fill out a merchant application.
Once your merchant account is open and your processor has provided the necessary payments hardware, you’re ready to go. You can start swiping cards as soon as the doors to your business are open. Your tailored payments solution should make this stage much easier and free up time to complete everything else on your to-do list. That said, there’s one more thing you should do every month: watch your monthly processing statement.
These merchant statements are complicated on purpose, and should detail every charge on every transaction, including the monthly fee. You will want to audit the statements or use a merchant statement analysis software like Staitment to ensure proper billing. This is the main way to reduce merchant account fees.
A merchant account is only offered to businesses, not individuals. The application must therefore be backed up if you are running an actual business. Below is the best way to legitimize your company. This will take place before a job application is completed. However, when you have completed this task, you should be prepared to submit all necessary documents to the acquiring bank for underwriting.
Your licensing requirements are dependent upon the type and country that you operate. For details on your legal rights and licenses visit your secretary-of-state site and complete registration procedures. In the case of a merchant account, an underwriter reviews many document documents. If your company is in good standing with the state, you can get a faster approval process.
Do businesses consist of squares and circles? This is basically what business structures ask. First, decide the structure of the company. This guide outlines the various business structures and the requirements that apply to them. Once you decide what the structure is of a company, you need an EIN to register for a new job and apply. The government gives these tax numbers out for the tax filing.
Almost every company accepting credit and debit cards or electronic payments requires a merchant account. The list also includes all kinds of businesses from small business owners to big companies. Below are examples of businesses that typically need an account or access to merchant services through a payment processing service. The specific conditions for opening a merchant Account may vary depending on their provider and the kind of company.
Banks love to bundle business bank acocunts with merchant processing, and this is rarely your best option. A merchant account is different from standard banking accounts. Merchants accounts use their money to make purchases exclusively, and the standard businesses bank accounts allow them to be used to carry out other financial and banking activities. The process of opening the merchant account does not require a merchant bank account to make the payment in the merchant bank account.
Many different types of electronic payment methods, including debit card payments, are available and require the creation of merchant accounts. We often get calls asking simple questions like: With my shopify store I see multiple BNPL (Buy Now Pay Later) options, should I choose Klarna?
The best way to identify the best products is to study and understand your target market, talk with a consultant that has experience and can offer insights and stories. You may check whether Merchant Services are capable of supporting the following methods. Tell me the most widely used payment method? Depending on the circumstances you can decide whether to open an online shopping account or look elsewhere.
Once you have organized the previous documentation, you can start preparing applications to set up a merchant account with merchant assistance providers. Before submitting an application, you should make sure the details are correct. Merchant Services providers use sophisticated software to cross-reference applications with legal data sources, which causes errors to occur. Please check everything. Aside from filling in the online merchant accounts application, the user must also upload all the required documents. Most providers use a digital document that is encrypted for uploading and uses electronic signatures.
It’s important to start accepting payments as soon as possible. A payment provider who merges many businesses together with a single merchant bank account means fewer losses and easier certifications are possible. Payment will be accepted the next day of the application. When you start a business you might find that sales volume is very low. Payment providers generally offer simpler pricing structures and flat-rate transaction fees which helps to predict costs more effectively. You can no longer lock out your contract.
You will want to have fair pricing and all technology and hardware solutions to accept payments. Swipesum's advice is to look at the acquirers first, as all other payments companies are distributors of the main acquirers and have a mark-up on their pricing. Under acquirers there are ISOs, learn more about ISOs here. ISOs have partnerships and agents to distribute their processing services, which have the highest mark-ups and should be avoided.
After you submit a request, the underwriting begins by the processors and the acquirer bank. This is typically an annoying process but a payments consultant can ease the pain. Underwriting professionals perform due diligence in order to identify any risks that may arise. As soon as you apply, the applicant will receive credit reports. If you previously blocked your credit card payments, you must immediately cancel the credit freeze. The merchant may now have certain conditions to satisfy if the account is approved.
A merchant account approval process may take between minutes and days depending on the process and the risks associated with the transaction. Depending on the risks involved in obtaining the grant the approval has certain conditions. The application procedure could involve a few changes and you may be asked for additional information. Keep in mind that merchant services want to help you. Do not worry about your questions and try to work with them for approval.
It should be free to apply and open a merchant account, if you have an application fee that's a miscellaneous markup by the salesperson and is 100% commission for them. Once the account is opened you receive transaction fees, monthly fees, PCI fees, and annual fees which you pay.
Merchants must protect their credit cards, these obligations are a little burdensome. the fees associated with PCI compliance can get out of control, you should audit your monthly merchant account statements for these. Keeping your merchant accounts secure will help reduce costs, pressure on you, and give you more comfort.
A merchant account is a type of bank account that allows businesses to accept payments via credit or debit cards. It acts as an intermediary between the business, the customer's bank, and the payment processor, ensuring that funds are securely transferred. Swipesum can help businesses navigate the complexities of setting up a merchant account, ensuring they choose the right provider and get the best terms.
To open a merchant account, businesses typically need to apply with a merchant services provider or a bank, providing details about their business operations, financial history, and expected transaction volumes. Swipesum simplifies this process by connecting businesses with the most suitable merchant services providers, ensuring a smooth and efficient account setup.
The cost to open a merchant account can vary depending on factors like the provider, the type of business, and the transaction volume. Common fees include application fees, setup fees, and monthly maintenance fees. Swipesum helps businesses compare different providers, ensuring they get the most cost-effective solution without hidden fees.
To obtain a merchant account, businesses typically need to provide proof of business registration, a valid business bank account, financial statements, and possibly personal guarantees or credit checks. Swipesum can help businesses prepare these documents and connect them with providers that match their specific needs, streamlining the approval process.
Qualification for a merchant account often depends on the type of business, its financial history, and its creditworthiness. Providers may require a credit check and a review of the business’s financials. Swipesum works with businesses to assess their qualifications and connects them with providers who are most likely to approve their applications, increasing the chances of securing a merchant account.
If you’re still feeling overwhelmed by the process, don’t hesitate to reach out to our payments experts at SwipeSum. Our goal is to help every merchant find the best solution for their business at the lowest rate. We can connect you with a processor that fits your needs and act as your payments advocate as you get your business up and running. Best of all, we do it for free, so you’ve got nothing to lose.
It's easy to toss these into a pile with other bills, but your payment processing statement can provide you with valuable information. Not only will you be able to see how much you transacted over the month, but you'll also be able to see all of the fees you paid. Payments providers are notorious for sneaking in little fees here and there, so keep your eyes peeled. Some can be removed with a phone call, while others might require a little more legwork. Failing to review your monthly statement opens the door for unnecessary fees, so make sure to stay vigilant. If you're still feeling overwhelmed by the process, don't hesitate to reach out to our payments experts at SwipeSum. Our goal is to help every merchant find the best solution for their business at the lowest rate. We can connect you with a processor that fits your needs and act as your payments advocate as you get your business up and running. Best of all, we do it for free, so you've got nothing to lose.
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Michael Seaman
Michael Seaman is the co-founder and CEO of Swipesum. A veteran of the payments industry and former employee at one of the largest payments companies, Michael, along with his brother Stephen, has led Swipesum since its inception in 2016. Swipesum is committed to providing innovative payment solutions and exceptional service to its diverse clientele. In his free time, Michael enjoys traveling with his wife Kelsey and their three children, pole vaulting, and engaging in typical Midwestern dad activities.
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