When you start looking for a Merchant
Account, many people get input from their local banker.
However, you should be aware that there are over 45,000
banks in the US and less than 1% of them are able to actually
process credit card transactions themselves. Most contract
with a third party to do it. Then the bank becomes a middleman
passing on additional cost to the merchant. Here are some
more facts & figures you need to know about banks:
Banks decline more Merchant Account applications for credit
card processing than Merchant Account Providers. In addition,
the application process is usually much less intensive
with a full service Merchant Account Provider.
Banks are in the banking business, Merchant Account Providers
are in the credit and ATM/debit card processing business.
Banks outsource credit card processing and focus on lending
Banks often have conservative pricing with higher transaction
rates & fees because the Merchant Account business
is an ancillary service. Merchant Account Providers have
to offer competitive pricing because this is the only
business they are in.
Banks are less likely to risk chargebacks and fraud. Because
banks typically farm out their credit card business if
there is any additional maintenance like administrative
costs from chargebacks, you are in greater danger of losing
your Merchant Account. Merchant Account Providers are
much better prepared to take on risk through loss prevention
and chargeback departments.
Should you be interested in accepting credit cards over
the internet you will find there is a greater likelihood
most bankers will have no idea about shopping cart rates,
secure gateways, and internet credit card processing fees
- particularly when something goes wrong. Due to the conservative
nature of banks, they are many times unable to place high-risk
merchants and/or start-up companies with merchant accounts.
Full service Merchant Account Providers do this every
day. Since this is their main business, they have the
operations in place that cater to small & medium start-up
companies who need Merchant Accounts, higher risk or not.