Letting Them Use Plastic

Obtaining merchant status will help to increase your sales.

Consumers are becoming creatures of convenience; when dealing with businesses-large or small-they desire ease of transaction. That most frequently translates into the ability to pay for services rendered or product purchases via credit card.

Small businesses are often denied merchant status because they can't prove to the bank that they are good risks. You must establish and demonstrate a track record before a bank or independent sales organization (ISO) will agree to back your business. Even today, some banks also hesitate to provide merchant status to companies without storefronts, to mail order firms or to individuals with a past history of personal or business bankruptcy. Although thankfully, it is getting easier today than it was even 15 to 20 years ago.

In this article we will help you to understand the reasons you may not be able to obtain merchant status, so that we can help you find ways to more favorably present yourself and your business as candidates for merchant status.

1. Start with your own bank. When shopping for a merchant account, the first place to stop is your own bank.

When banks look at an application, they consider three critical things: the principals, the product and the process. In other words, they need to know about you, what you are selling and how you are selling it. Be sure to take the time to carefully develop your proposal. It can really pay off. Show your bank that you're serious about obtaining merchant status and you take your business very seriously.

In spite of your best efforts, the bank may still turn you down. The next step is to approach other banks in your area. If you're still running into roadblocks, there is another option.

2. Investigate ISOs selling on behalf of other banks. ISOs serve as a liaison between banks and merchants. Your odds of getting merchant status from an ISO may be greater than from a bank, but the costs-and risks-may also be greater.

Most ISOs are legitimate businesses, but it pays to be wary. The first thing you should ask any service provider is what banks they represent. When considering an ISO, a merchant should know which bank they are working for, and should check with MasterCard and Visa to ensure the ISO is properly registered. Keep in mind that this service you are buying can have a significant impact on the cash flow of your business, and don't be shy about asking for references.

A good bank or ISO should provide reliable and trouble-free processing, with responsive customer service whenever you have a problem, all at a fair price. What's fair depends on the risk level of your business and the terms being offered by competing ISOs. Make sure the merchant bankcard provider you choose fully supports you as a merchant with a variety of services, like check guarantee, acceptance of all major credit cards, debit cards, etc. Also make sure they fully support the equipment or software they sell you. If they don't, ask them who does and how much extra this costs. Some programs may be appealing, but require hidden costs for assistance.

3. Clearly understand the costs involved. To better grasp the issue of costs, you must understand how credit card sales are processed. Simply stated, when you conduct a charge transaction, you will receive the cost of that sale, less a previously agreed-upon discount (from two to more than five percent), from the bank or service company. The more stable your business is, the lower your discount rate will be.

Fees are a substantial cost: ISOs typically charge fees for minimum activity, if yours doesn't reach a pre-determined amount; fees for each transaction made, above and beyond the two to five percent discount; and fees for processing customer statements. Another cost is that of equipment. Most merchants today use an electronic draft capture terminal to process sales, which you can lease or purchase. It is more economical to purchase the equipment, but your choices will be limited by the ISO you choose. You might be able to purchase a used terminal from your ISO or buy a new or used terminal from another source. Check with your ISO first!

If you have a personal computer and a modem, there are several software packages currently on the market that perform authorization and draft capture. Make sure that any software you buy is compatible with the system used by your ISO.

4. Caveat emptor. As with any other business decision, carefully consider your options and shop around. Research the requirements, costs and services of banks and ISOs offering merchant status, and talk to other business people who are already offering credit card service. There are many reputable companies out there and, of course, there are also bad apples. As a merchant, ask questions about any company you are choosing to use. The company should be willing to answer any questions you might have, as well as to tell you openly if they can't!

While the information presented might seen very disheartening to your getting merchant status, listen to this. Many individuals who have filed bankruptcy and have terrible credit have received merchant status.

While you may pay more fees going through an ISO, it is worth it to be able to say, Visa, Mastercard, American Express or Discover. For those of you doing any kind of consulting it is a big plus. If you eventually sell products, again it is a great convenience for your customers and many times will close the sale.

So, GIVE YOUR CLIENTS THE PLASTIC OPTION!

Copyright 2004 DeFiore Enterprises

Interested in having your own successful, home based creative real estate investing business? Chuck and Sue have been helping folks start successful home based businesses for over 19 years, and we can help you too! To see how, visit http://www.homebusinesssolutions.com for the latest FREE tips and tricks, educational products and coaching in creative real estate investing and home based businesses. No time to visit the site? Subscribe to our "how to" Home Business Solutions Digest, it's like having your own personal coach: mailto:subscribeHBS@homebusinesssolutions.com

In The News:

---

Selling: an art of a skill?

Selling is as much an art as it is a... Read More

7 Pitfalls of Using Email to Sell

* Are you sending e-mails to prospects instead of calling... Read More

Looong and Boooring Sales Letters

You have all seen them,the sales letters that never ends.... Read More

Selling the Dr. Seuss Way

"I am Sam. Sam I am. Do you like green... Read More

Can You Use Hynotic Like Statements To Sell More Products?

As I become more successful with my internet business I... Read More

Are You a Winner or Whiner?

I've found that winners say "I choose to." Whiners, on... Read More

Creating Intense Emotions That Motivate People

Ever wish that your presentations could be as much fun... Read More

How to Eliminate Objections to Price

Have you ever stepped your way through the sales process... Read More

Going Global: Communication Across Mental Boundaries

A completed communication consists of a sender and a receiver.... Read More

Solution-Sell is a Myth!

Who among us is not already up to here with... Read More

Your Ad -- Who Cares?

Junk mail. We all get it. And it goes straight... Read More

To Buy or Not to Buy? Motivating Your Customers to Take Action!

All customers have a choice to make. Sometimes that choice... Read More

The Prejudging Predicament

There's a direct correlation between sales experience and prejudging. The... Read More

What Do Mobile Auto Detailers Clean When it Rains?

A mobile auto detailer and their profits are tied to... Read More

Doomed Before You Dial?

Several weeks ago, I conducted a "Mastering the Cold Call"... Read More

7 Strategies for Writing Fundraising Letters

Writing fundraising letters can be an effective way to request... Read More

Writing Effective Sales Messages

A sales letter is a document designed to generate sales.... Read More

Recommending Products Vs. Selling Them

Some of the best sales people I have ever met,... Read More

How to Build A Steady Stream of Customers--Step One

The success of a small business depends upon a steady... Read More

Selling Against Goliath

Selling Against Goliath?How to Take on the Big Guys and... Read More

How To Get Rich Giving Away Something Free

The best of all worlds is to have a product... Read More

Create A Killer Product by Writing Your Sales Letter First!

You may not realize this, but when if you are... Read More

Sales Copy Tips

Writing good sales copy is not an art, it is... Read More

Selling the Difficult: How to Sell What People Dont Understand How to Buy

I'll play a seller, using conventional selling methods, selling something... Read More

Successfully Selling Your Professional Services

As a professional service provider you face special challenges promoting... Read More

The Importance of Good Sales Leads

An important part of your business plan should be to... Read More

Sales Brochures - 9 Steps to Success

Even in this day of websites, many customers want to... Read More

Give Up the Need to Sell

Most business people will tell you that selling is not... Read More

5 Ways to Encourage Impulse Purchases

I just bought six square pieces of spongy fabric for... Read More

Picture Yourself a Winner

In the work place, the amount of good things that... Read More

Telephone Techniques

TELEPHONE TECHNIQUESSelling face to face is different from selling on... Read More

A Simple Truth - Authentic Sales Tip

A Simple TruthDo you have the right stuff?Are you consistent... Read More

What is Lead Generation?

Lead Generation is vital to all businesses. All companies try... Read More