On the other hand, if the card is not present, and the purchase is made on the internet, the discount rate may be closer to 5 percent, since the merchant has really no idea if he is doing business with the true cardholder merchant services agent program. Not surprisingly, identity theft and fraud are much bigger problems for online sellers than they are for traditional sellers. A small business owner should always shop around for the best or lowest discount rate he can find, since the charge can have an enormous effect on the bottom line.
Though the discount fee is probably the most expensive one, there are several other charges merchant account holders will encounter. There is the transaction fee (a fixed fee for each purchase), the statement fee (a monthly account maintenance charge), and the chargeback fee (a fine for returned items). These fees are fairly standard and should come as no surprise to new business owners. Of course, there are also hidden fees that some service providers sneak into their contracts. All applicants should go over these contracts carefully and keep their eyes peeled for hidden fees before they agree to anything. Merchant services accounts can help most new business owners improve customer service and increase sales in a competitive marketplace.
America is often impugned in the international press for exporting its consumer culture to the rest of the world. Huge corporations from the States sell everything from cars to shoes to hamburgers anywhere and everywhere they can. Many foreign leaders believe that American consumer culture is vapid and possibly even inimical to cherished customs and traditions. From a political standpoint, these critics might just have a point. But from an economic one, they have a skewed view of the real America.
While it is true that the U. S. is home to hundreds of the world’s top corporations, most Americans are employed by small businesses. A stunning 52 percent of workers in the private sector work for small businesses, according to the U. S. Small business Association (US SBA). These companies represent 99. 7 percent of all employer firms. How important are they?
Though the corporations get most of the headlines, small businesses have generated nearly two-thirds of all new jobs over the past fifteen years. Firms that employ fewer than five hundred workers (the official definition of a small business) create more than half of the country’s gross domestic product (GDP). At last count, there were 27. 5 million small businesses in the U. S, which means that corporations are actually quite rare. For every McDonald’s or there are approximately three hundred small businesses.
Hair salons, pizzerias, diners, Laundromats, antique stores and custom printers can be found in most American towns. The money that is spent at the local level in these stores has a profound effect on the U. S. economy, since about two-thirds of the country’s GDP comes from consumer spending. What does it take to survive and thrive in this ultra competitive environment?
American shoppers are not easy to please. Even at the local level, they expect businesses to cater to their needs. This often means paying for services from outside providers. One service every new business owner should closely consider is merchant services. What are they?
Every business that processes credit or debit card payments must obtain a merchant service account from an authorized provider, often a bank or financial institution. These providers not only check to see that a card is valid, but they also collect payments for their merchants. As you might expect, they charge fees to complete these essential services.
The number of businesses that can legitimately remain cash only has dwindled in recent years. A small general store, a car wash or a diner may be able to get away with offering limited payment options. Since they sell mostly inexpensive items and most of their customers are locals, they often make more without merchant service fees. However, when a small business sells more expensive items, its customers expect them to offer additional payment options. After all, six out of every ten retail transactions are made with a credit or debit card. Rejecting a customer’s preferred payment option at the register is invariably bad for business.
As we mentioned, these accounts cost money. Merchants are charged a series of fees each time they swipe or process a credit/debit card payment. Like all financial institutions, providers consider each applicant individually. They examine things like credit scores, business history, and the industry the merchant competes in. But the single most important factor is whether the merchant will be accepting payments in person.
The number of businesses that can legitimately remain cash only has dwindled in recent years. A small general store, a car wash or a diner may be able to get away with offering limited payment options. Since they sell mostly inexpensive items and most of their customers are locals, they often make more without merchant service fees. However, when a small business sells more expensive items, its customers expect them to offer additional payment options. After all, six out of every ten retail transactions are made with a credit or debit card. Rejecting a customer’s preferred payment option at the register is invariably bad for business.