If your business is home-based or has been in operation for less than two years, you're likely to face objections from the bank.
If yours is a home-based or a brand-new company, be sure to meet with the banker to show your business plan, offer collateral and discuss your personal net worth. You are more likely to be able to overcome objections by being open and honest. Even if your bank turns you down, however, you still have options. First, you can always try other banks.
If you don't have any luck getting a bank to back you on your own, consider going through an Independent Sales Organization (ISO). These are field representatives from out-of-town banks who, for commission, help businesses find banks willing to grant them merchant status. Ask your bank to recommend an ISO, or look in the Yellow Pages under credit cards. The ISO may be able to help you simply because it represents dozens of banks, each with their own specialties and criteria. The ISO representative can match your needs with the needs of the banks he or she represents, without requiring you to go through the application process with all of them.
Of course, you will pay higher fees because you run a home-based business, which presents more risks to the bank. Some banks will require you pay either a percent of your monthly credit transactions or dollar amount, whichever is higher. You also pay a per-transaction handling fee, a monthly fee and per month fee to rent a point-of-sale terminal.
Which Credit Cards Should You Accept
Once you've obtained merchant status, you can accept a variety of credit cards, depending on which are offered by your bank. Some banks issue their own cards, and others act as intermediaries between the credit-card companies and your business.
Different banks offer different cards. Most will likely offer Visa and MasterCard, because these are the cards most consumers have. Many banks also offer Discover and American Express, but not all do.
Before you sign on with any bank, consider the costs carefully. If you don't anticipate many credit-card sales, it might not be worthwhile for you to pay the setup and monthly fees. If you're not sure the costs will benefit your business in the long run, call a few banks and find out what kinds of fees they charge. Be sure to call more than one, because fees vary and you won't have a set figure until you actually apply.
Accepting credit cards may not be for every business. But if yours is the kind of business where customers are likely to want the convenience, you're only cheating yourself if you don't give them what they want. Remember, your competition will.
Check It Out
If a lack of a business track record is what keeps you from getting merchant status, consider signing up with an agency that provides checks by phone. This service allows you to accept payment directly from a customer's checking or savings account.
With this type of service clients simply e-mail, fax or send by modem the customer's name and address, the amount of the sale and all the numbers listed across the bottom of your customer's check. These numbers, include the bank routing number and the customer's account number. They use these numbers to draft the appropriate account and pay your business. You can usually request that your payment be sent by overnight shipment, resulting in your getting paid even before the draft has been completed.
If you suspect a check might be bad, you can have them check it against its computer database, which includes identification information on banks and their branches in both the United States and Canada. There is a per transaction charge for this additional screening.
So, as you can see you have a number of ways to get merchant status. Remember, the name of the game is options and convenience for your customers. If you don't offer it, they will go to someone who does. So what are you waiting for!
Copyright 2004 DeFiore Enterprises
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