Retail Merchant Account

Preparing Your Retail Storefront

Before even starting to look for a retail merchant account provider (or perhaps when you've just started to look), it is important to know where you want to place your credit card machine.

Here are some aspects to consider when deciding where to place processing equipment:

1.  Customer access to terminal
If you plan to accept debit cards, customers will need to access your terminal (or PIN pad) so they can enter their PIN.

2.  Ease of processing access
The faster the better, customers are an impatient bunch and expect speedy checkout times.  Having a terminal located halfway across the store won't accomplish this task.

3.  Access to telephone jacks
Terminals will need to be placed close to telephone jacks for connection.  Have your local telephone company install jacks where you'll be placing processing equipment.

4.  Size of equipment footprint
Do you want an all-in-one integrated terminal solution or separate equipment?  More merchants seem to want a smaller footprint, to conserve countertop space, and tend to choose integrated equipment.

5.  Purchasing a second phone line
In most cases, you'll want to purchase a second phone line from your local telephone company to connect your terminal to.  Tying up phone lines when processing transactions can cost you sales.  You're in business to bring in sales... not lose them.

Costs Associated with Retail Merchant Accounts

• Swipe Terminal Purchase:  $250 and up
   
• Application/Setup Fee: $0 to $100
   
• Gateway Fee:  Does not apply to retail merchant accounts
   
• Statement Fee: $0 to $15/month
   
• Monthly Minimum:  $0 to $25/month
   
• Annual Fee:  $0 to $100/year
   
• Discount Rate:  1.60% and up
   
• Transaction Fee:  $0.20 to $0.25

Choosing The Right Point Of Sale Swipe Terminal

OK, we covered every aspect of preparing your retail establishment, what to look for in finding a merchant account, and lastly what information you'll need to obtain your retail merchant account.  Lets change our gears a bit and look into choosing a POS terminal for your business.  Do you need a full-featured all-in-one solution?  Perhaps just a basic swipe terminal solution is all that's required.  This section will aid you in the decision process.

Determining the Features Your Terminal Needs

Before you begin looking at swipe terminals, you need to come to a conclusion on what types of payment you will want to accept.  POS swipe terminals have the ability to accept way more than just traditional credit cards.  Here's some of the other types of payment that can be processed, in addition to credit cards:

• Debit Cards

All POS have the option of allowing you to accept debit cards like Star, Interlink, MAC, Honor, and others.  Some terminals have internal PIN pad, while others have a port to connect a hand-held PIN pad.  The biggest benefit to accepting debit cards in the fact that only a transaction fee is charged, never a discount rate.  Choosing whether to have a POS swipe terminal with an internal or external PIN pad depends on some factors like:

1.  Do you mind customers touching your terminal to enter their PIN?  Or would you be more comfortable with them using a hand-held PIN pad instead?

2.  There is less clutter with an internal PIN pad since it is an all-in-one unit

External PIN pads usually can be purchased for between $100 and $200. 

• Electronic Check Conversion (ECC)

Simply put, ECC will allow you to process paper checks electronically.  In order to do this you'd need to have a check imager/reader.  These run a few hundred dollars.  What they do is scan the MICR line at the bottom of the check and take an image of it to store for records.  You might see this at some bank ATM machines, where they scan your check and print a copy of it out on your receipt.  Normally there are check image retrieval and storage fees. 

Here's some advantages to using Electronic Check Conversion:

1.  Money is deposited into your account faster

2.  Reduces paper check handling, like eliminating the need to deposit checks at your bank

3.  Reduces risk of losing or having paper checks stolen

4.  Returned checks are reported sooner

• Loyalty Cards (gift and rewards cards)

Accepting loyalty cards is great if you plan to be very promotional with your goods.  This solution is good for mostly cash environments like grocery, movie rental, hardware stores, etc.  Accepting loyalty cards will help increase business.  You've seen these at grocery stores where they scan a little card that gives you "bonus points" for shopping.  They also allow you to take advantage of current promotions.  Most all terminals can be programmed to accept loyalty cards.

• Fleet Cards

Fleet cards only apply petroleum-type companies that will allow customers to use a special credit card to make fuel purchases. 

• Smart Cards

Smart cards are still very new.  In addition to paying for goods like a credit card, smart cards have a special chip in them that allows you to store specific information.  College campuses have begun using these to keep information on students, in addition to allowing them to "charge up" their cards with money. 

Smart cards will probably take over the traditional credit card market within the next 5 to 10 years.  It would be in your best interest to invest in a terminal that either has an internal smart card processor or get a terminal that supports the addition of a hand-held smart card reader/writer.  These external units cost about the same as external PIN pads.

• ATM/Check Cards

These are commonly referred to as debit cards, however they are actually check/ATM cards.  You can tell their difference from typical debit cards because they will have a Visa or MasterCard logo on them.  These cards can either be processed the same as credit cards or you can accept them as debit cards where the customer enters in their PIN.  It would be beneficial to you if you accept them like you would a PIN-based debit card, then you'd only incur a small transaction fee and no discount rate.  This will save you money in processing costs.

• Electronic Benefits Transfer (EBT)

If you wish to cater to food stamp and cash welfare benefit customers then accept EBT cards is for you.  EBT isn't just good for food purchases, but also including non-food items.  EBT works just like credit card processing.  You will either need a POS terminal that has an internal PIN pad or purchase an external PIN pad.  EBT customers need to be able to enter in their PIN during checkout.

Integrated vs. Non-Integrated POS Swipe Terminals

Now that we covered what all you can accept, it's time to decide whether you want to use an integrated POS swipe terminal or a non-integrated system.  There are benefits to both sides, lets take a look at the pros and cons of both types:

Refurbished vs. New POS Swipe Terminals

Just as with another other electronic refurbished products, you can save a great deal of money purchasing a used swipe terminal.  Refurbished terminals were returned to their manufacturer to be fixed and are then sold at a much lower price.  And in many cases, the warranty is the same on refurbished terminals like it is for new terminals.  Refurbished terminals may have some slight blemishes, but that can be expected of a previously own POS swipe terminal.  If you are on a tight budget, you might want to consider looking into a refurbished terminal instead of a brand new one.

Company Suggestions

Recommended Resources:

Merchant Accounts to accept credit cards - MerchantSeek.com - Eliminates the hassle of searching the internet for credit card processors by providing a one stop resource for merchants looking for credit card processing information.

Top 3 Merchant Account Pitfalls REVEALED! Avoid the mistakes many people make when choosing a merchant account provider for their business.  Learning this information ahead of time will save you time and money both in the short and long term. Avoiding merchant account pitfalls