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:[email protected]

In The News:

Pets and Real Estate Sales  The New York Times
Why Women Are the Future of B2B Sales  Harvard Business Review
Home sales dip 40 per cent in May  KitchenerToday.com
Dunkin’ says its sales are improving  Restaurant Business Online
Fishing license sales are way up  Minneapolis Star Tribune

What Are Car Boot Sales?

If you live in England then you will already be... Read More

Consulting Versus Selling

Consulting Vs Selling, How we can make sales by not... Read More

Top 10 Ways to Sell your Product or Service While you Sleep - Part 2

Part one of this article is available at ... Read More

Don?t Waste My Time!

Many participants in my programs ask how to deal with... Read More

Focus on a Trade - Not a Discount

Smart buyers will always ask for a better price. Unfortunately,... Read More

Selling Is Not A Dirty Word

Selling--a word that strikes terror in writers and professionals. We... Read More

Voice Mail That Sells

As a business owner, I receive my share of sales... Read More

Selling To Women - Selling To Men - It Isnt the Same

Selling To Women - Selling To Men - It Isn't... Read More

Ask for the Business

Many times in the process of making a sales presentation... Read More

Asking The Right Questions

On an introductory call, how do you gather all of... Read More

Telling the Value Story

You arrived on time and completed your calculations. You worked... Read More

Peddlers, Hucksters, & Empty Suits

Ever feel like you were "just a salesperson"? I think... Read More

An Ideal Selling Situation

The largest sale that I ever closed was negotiated over... Read More

Are You REALLY Listening?

Being a good listener requires more than just keeping quiet... Read More

Solution-Sell is a Myth!

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

How to Write Effective Selling Proposals

Depending upon how much you enjoy writing, writing sales proposals... Read More

The Prejudging Predicament

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

Challenge Yourself!!! Evaluate Your Selling Skills!

This evaluation is not for the "weak-kneed". Real questions to... Read More

The Art Of Cold Calling

I know, don't groan. You have to do them if... Read More

Tips for Increasing Your Profits with Gift Certificates

Offering gift certificates is an excellent way of increasing sales... Read More

How To Seal The Deal In Seven Seconds

Can you close a sale in just seven seconds? If... Read More

What Should I Charge?

People ask me, "What should I charge?"I say, "Ask your... Read More

Top 10 Ways to Maximize Your Approachability

After reading and researching thousands of books, articles and other... Read More

Clear Up Blurry Communication

One of the top brewing companies in America is a... Read More

Restaurant Pressure Washing

Many pressure washing companies try to stay away from the... Read More