How Do I choose a Merchant Account Provider?
If you want to accept payment from your customers in form of credit or debit card, you will need a merchant account. You cannot simply obtain one from the credit card companies such as Visa, MasterCard, and Discover.. Credit card payments are processed by several processing companies in the US, including the two giants, FirstData and PaymentTech. You can choose to deal directly with the processor- or you could contact a merchant account provider or reseller who can help you by comparing different processors and finding the best rates. Since the provider acts as a broker, it's always good to shop around and look at all of your provider options, including banks, resellers such as Costco, and by searching for merchant account providers online.
Normally, most merchant accounts specify a term of use (usually three years) and they typically hand you a contract describing a lot of potential fees and charges. That's why it is strongly recommended that you request the full agreement (providers usually just show you a 2-3 page short agreement that refers to a much longer one) and make sure they are not trying to charge you unreasonable fees in the terms.
How much will this cost? It varies depending on your industry, your volume of sales, your chargeback history, and on the policies of the provider. The main fees associated with merchant accounts are the discount rate, which is a percentage of your sales, and a transaction fee, which is a dollar amount fee for every transaction you process. On top of that, there are authorization fees, statement fees, batch fees, monthly minimum fees, and chargeback fees. Wikipedia has an excellent article about all the possible fees you may encounter here: http://en.wikipedia.org/wiki/Merchant_account#Other_Fees
Shopping for a merchant account isn't much fun, as there are tons of numbers, figures, and legal terms. However, since you will be locked into a contract with them for some time, it's worth doing your full due diligence and selecting the option that best fits your budget.
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