When you’re on the brink of expanding your direct selling business, you begin to experience many new emotions. There’s the exciting high of starting your own business. There’s the uncertainty and leap of faith in moving away from a regular paycheck. And there’s the anticipation of relying on yourself and your strong relationship skills to build a successful business and future.
Being ready to expand also means that you’ve done many things right, because we all know successful businesses don’t happen on their own or overnight. It means you did the proper planning, prepared yourself for calculated risk taking, and have the motivation to succeed. It means you are invested in your “dream” and understand you need new tools such as Merchant Account Services to take you to the next level. And, oh, yes, it probably means you’ve missed time with family and friends because of the hours you keep.
“Merchant Account Services” is an umbrella term used to describe the services that allow you to accept credit and debit card payments from your customers. Of course, these services are essential in today’s marketplace, whether you are an online business or holding sales events at your friends’ homes.
In April 2009, Visa reported that its debit card volume had surpassed its credit card volume for the first time in history.1 This trend can be attributed to many factors. For instance, many consumers are paying down credit card debt and using their debit cards for purchases, instead. These sales still need to be captured via a merchant account.
Payment processing is when payment is transferred from buyer to seller. During processing, payments are either approved or declined. Approved payments are authorized by the card-issuing bank and settled. Payments are then deposited in your bank account within 48 banking hours. Afterwards, if a customer is unhappy he/she can request a refund or a chargeback, which is essentially them contesting the price or fee they were charged for the product or service.
Sounds simple, and it is, but behind the scenes are many other factors at work. Does your data meet PCI standards so that the financial information can be transferred quickly and accurately? Is your account secure and safe from security breaches?
Any provider worth their salt will offer PCI data compatibility and SSL security certificates.
Since Merchant Account Services affect the core of your business—your sales, income, and availability of funds—one cannot overstate the importance of shopping for the best Merchant Services provider, and one that includes these functions. Many of us turn automatically to our bank, but your bank may not provide the best products, and there are many other options to explore.
The place to begin when considering different providers—especially in direct selling—is experience. Is the provider established in the field and have expertise with direct sales companies? For candid testimonials, you can start with the people who know the provider’s performance best—their customers. Ask your business colleagues and industry associates who their providers are and whether or not they are satisfied with their service.
Take a moment to note that direct selling often falls into the “high risk” category with service providers due to the high chargeback volume of traditional direct sales such as mail order, online gaming, and online auctions. For this reason, it may take you a little longer to get an account with certain providers, so look for one with direct selling experience. Some providers may ask you for an initial deposit so there is a reserve in your account. Research how much of a reserve you will need and how long you will need to keep it. Some providers can assist you with offshore banking accounts, which is an option for high risk businesses that Visa and Mastercard may have reservations about covering. Be very careful to choose a legitimate offshore solution and use this as the very last resort.
Next, try to assess how accessible the provider is—can you contact a representative immediately and directly? Ideally, you want to find a provider who is proactive; one who wants to build a relationship with you, one who takes the initiative to learn about your business and is interested in helping you grow. Listen for their ability to brainstorm, to offer to research an idea and follow through and for stories of other client successes. Your provider should also offer other important aspects of payment processing including sales programs that build customer loyalty and increase sales.
Study and compare the fees from one service provider to the other and calculate the cost using your best and worst sales months. (Remember, upfront fees may seem expensive, but the sales increases over time will more than make up for this as you offer your customers easy payment options.) And, if you are interested in pursuing an international market, you will want to find out whether the provider has international payment processing capability and experience with global e-pricing. This ensures that your pricing will show in other currencies when selling abroad, giving you the capacity to grab a greater share of your market from your competitors in the global marketplace.
To set up a merchant account you need the basics: Tax ID Number (FEIN); voided business check; favorable credit history; website information (eCommerce); and articles of incorporation. And, once you carefully research your provider and show your customers how easy it is to buy from your business, you are well on your way to increased sales, higher income, and even greater success.
1 Wall Street Journal, “Debit-Card Use Overtakes Credit”, May 1, 2009.