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Accepting Credit Cards
Today's consumers expect to be able to pay for service and
merchandise with their credit cards. Accepting credit cards is an essential
necessity whether you are doing business on the web, from your home office or
from your business address.
The first thing any business should do prior to opening their doors is to apply
for and secure a merchant account in order to accept credit cards as an
alternate payment method to cash.
A merchant account is set up through a financial institution or bank and will
enable you to accept credit card payments
Be aware that a merchant account is not a free service but as with most any
other business, rates and fees are negotiable to a certain extent. In any event, it is well worth
the expense to get set up with the necessary equipment. By far the most popular credit cards are Visa and Mastercard, but there are many
others.
Shop around and ask lots of questions. When applying for a merchant account, make sure that your
provider accepts a wide variety of popular credit cards so you won't have to turn away
business.
Other than initial setup charges, here are some of the basic estimated costs involved in accepting credit cards:
Monthly Fixed Fee
There will most likely be a monthly fixed fee for maintaining your account which can be anywhere
from $10 to $25.
Fixed Transaction Fee
Fixed transaction fees usually range from $.20 to $.30 per sale regardless of
the amount involved.
Discount Rates
Discount rates typically are from 1 to 4% of the sales price. This is the
commission the provider charges for handling the transaction and is in
addition to the fixed transaction fee.
Monthly Minimum
In addition, there may be a monthly minimum requirement which you will pay even
if you had no transactions.
Other
Other fees are applicable such as charge-back fees and a possible initial
deposit amount to cover such occurrences. You may be charged additional for non-qualified
transactions and/or address verifications.
Taking all this into consideration, you can expect to pay somewhere between 10
and 15% of your revenue from each sale to your merchant account provider for the
privilege of being able to accept credit cards.
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