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Steps to Opening Up a Merchant Account.

We didn't know anything about it. The terms MID and TID were being thrown at us, but no one could seem to tell us what they meant. We were lost and confused so...

We went with the cheapest merchant account we could find.

Whoops.

As we started to become more educated about merchant accounts and merchant banks we realized a few of things.

First, we were paying too much. In our haste to find the cheapest set up, we neglected to compare monthly costs.

Second, the turnaround time of our deposits was about 2 weeks. We were paying out faster than our merchant bank could deposit. That's not good.

And third, we wanted customer service. We had questions and our merchant account customer support couldn't answer them.

After realizing all this, Andy looked at me and said, "Are we crazy?"

And, of course, we are a little, but that had nothing to do with the merchant account.

So the next day I set out to compare other merchant accounts with ours. Let me just tell you how many merchant banks are out there... I swear I called them all.

Most of them had a set up fee and all of them had a monthly statement fee. Some offered a low set up fee but charged nearly as much as I was paying for the monthly statement fee. And many others had super high discount rates to make up for their low start up costs.

And every single one of them was ready to sign me up the moment I called. They didn't want me asking questions, they wanted my bank account number.

No thank you.

At the recommendation of Chris Malta (The Dropship Source Directory) I called Advanced Credit Systems and Christine changed the image I had in my mind of merchant bankers.

The first thing she asked me was what questions I had!

After to talking to her for a few minutes I realized I had struck gold. Not only had I found customer service, but also the lowest priced merchant account.

Advanced Credit Systems has a $100 start up and then it's only a $10 a month statement fee. Christine also offers the lowest discount fee I have come across.

We switched immediately.

Now, Andy and I get a lot of questions from store owners about merchant accounts so we thought it would be great to have Christine write up a newsletter detailing everything you need to get a merchant account and the steps you should take.

By Christine Phillips

Advanced Credit Systems

Once you have your products and distributor(s) lined up and you have your business license you're ready to start thinking about the money side of things.

Take a drive to your local bank and open up a business checking account.

Make sure they give you starter checks and the bank will accept them. Many new merchants try and use their personal checking account but unfortunately the bank will not allow it.

Now! You are just about there.

If your web site is not complete make sure you have a couple of pages of product and pricing to submit because the bank will want to see what you are selling. Usually a copy of the homepage and one or two product pages is enough.

Well that's pretty much it, painless but time consuming!

Now lets talk about the bank discount rates. The industry standard is between 2.19% and 2.25% you should not pay anything higher than this.

Many new merchants are confused with how the discount rate works so here is an example.

On an average sale of $100.00 the bank will take 2.19% of that sale which is $2.19 The bank will also charge a transaction fee which you will find to range between .28 and .30 then there is the statement fee which is a standard $10.00 a month.

Make sure you go with a processing bank that does not charge a monthly minimum. Many merchants think that the $25.00 monthly minimum means that they have to sell at least $25.00 worth of products per month.

Not so.

Here is an example of how it works.

3 sales@ $100.00 a piece=$300.00- the discount rate of 2.19%=$6.57

$25.00 monthly minimum- the discount rate of $6.57 leaves you a balance owed of $18.43.

Then you have your transaction fees.

3 transactions@.28=.84 and don't forget the $10.00 monthly statement fee.

Here's a breakdown:

$6.57-discount fees

$18.43-monthly minimum

$.84-transaction fees

$10.00 monthly statement fee

Total=$29.27

Here's how it should read.

$6.57-discount fees

$0-monthly minimum

$.84-transaction fees

$10.00-monthly statement fee

Total=$17.41

The monthly minimum is like the sealant a car salesman really wants to sell you. There's no reason for it.

If you are opening a Yahoo store make sure that the processing bank that you choose is compatible with Yahoo, many are not. Your merchant account must be compatible with First Data Merchant Services.

Those of you who are building your own site can go online and get a shopping cart for free and your processing bank can supply you with the real time gateway.

This is another thing to investigate. Don't get taken advantage of!

You should not pay any more than $195.00 for the real time software which should also include the merchant account set up. The most secure and user-friendly gateway that I recommend is authorize.net I have been using them for years and they really are terrific.

Side Bar---------------------------------------------------------------------------------------------

If you're a Yahoo! Store Owner, you don't have to worry about the gateway set-up or software. It's included with your Yahoo! Store. Isn't that nice?

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Well the last thing I would like to mention which I should have brought up in the beginning because it is most important, customer service. When you are investigating banks and you call and get an answering machine... leave a message. But if you do not get a call back within fifteen minutes forget it.

All your dealings with this bank will be the same. When you have a question or need help, you'll get the answering machine.

Take my word for it, it's not worth it.

Well that's it for now. Feel free to email me with any questions you might have at info@acs-cvp.com.

Hope to talk to you soon!

Christine Philips

Advanced Credit Systems

800-814-3163

Christine certainly is down with the numbers. I hope this helped explain some of the subtleties of merchant accounts.

It can be a daunting task, believe me I remember. But if you know what to look for, the best one will shine brighter than all the rest.

And, if you're not quite ready to set up a merchant account but you have some questions or you want to compare rates, Christine is there to help.

Andy Jenkins

Owner Online Store Profits