Home Based Business Merchant Accounts

Home based business merchant accounts can be quite complex when sorting through the available options. There are a number of strategies to employ that will make your search successful.

Home based business merchant accounts owners that have products or services to sell typically consider opening a home based business merchant account. These are special accounts that are set up by a bank or through an Independent Sales Organization (ISO) that allow your business to accept credit card payments for goods and/or services.

All Home based business merchant accounts are not the same. What works for one business may not work for another. Before opening a home based business merchant account, there are a number of factors that home business owners must consider. Examples include:

How will you sell your products or services

How will you interface with a Credit Card Processor

What merchant account provider will you use

How will you sell your products or services

One of the first things home business owners must consider before opening home based business merchant accounts is how to sell their products or services. Will your customers make purchases on-site, online or through mail order Most home businesses probably won't sell items on-site as do retail stores, but through mail order or online. The majority are typically interested in selling items online.

How will you interface with a Credit Card Processor

When selling products or services online, home business owners will need to determine what Internet gateway system is best for their Home based business merchant accounts. An Internet gateway system is the pathway for connecting the online ordering system with a Credit Card Processor. Credit Card Processors handle credit card transactions and deposit funds into merchant accounts.

Since the merchant bank (bank that issues the merchant account) typically selects the Credit Card Processor, merchants should select an Internet gateway system before opening a home based business merchant account. This will ensure that the merchant account provider you choose has a credit card processing system that is compatible with the Internet gateway system that you would like to use.

What merchant account provider will you use

When seeking to open home based business merchant accounts, home business owners must also determine which type of merchant account provider is best. Merchant account providers are businesses that set up home based business merchant accounts for you. Home business owners can open the account with a bank or through an Independent Sales Organization (ISO). Here is how the process works:

Banks

You open a merchant account with your bank.

The bank enters into an agreement with a Credit Card Processor that the bank chooses.

The Credit Card Processor verifies the customer credit card, processes transactions, and deposits money from the sale into the merchant account.

There are both positive and negative aspects to opening home based business merchant accounts through your bank.

Positives:

Banks are considered to be secure and dependable.

Fees associated with setting up and maintaining the home based business merchant account are lower for long standing businesses and owners with good credit.

Negatives:

Many banks do not open merchant accounts for businesses seeking to accept credit cards over the Internet.

Banks are quick to close merchant accounts that have chargebacks. A chargeback is money that is refunded to a customer's credit card either for fraudulent or legitimate reasons.

Independent Sales Organizations

For those whose credit is "not-so-good" or who would like to be able to accept credit cards online, an Independent Sales Organization (ISO) is another option. An ISO will set up a home based business merchant account for you through a bank. There are both positive and negative aspects to opening merchant accounts through an ISO.

Positives:

ISOs give you the option of accepting credit cards online.

ISOs are more likely to accept high-risk businesses.

Negatives:

ISOs charge fees that are higher than the bank's fees for setting up merchant accounts.

There are a number of disreputable ISOs that mislead merchants and dupe them into paying high fees for the home based business merchant account.

Before setting up home based business merchant accounts through ISOs, merchants should look into them carefully. Check them out with the Better Business Bureau for complaints.

Do Your Homework

Home business owners should investigate thoroughly before making any decisions, in other words "do your homework." Here are some resources that will help you in your research, particularly for those who are interested in accepting credit cards online:

Home-based businesses use merchant accounts to accept credit card payments for goods and/or services. Merchant accounts are usually set up by a bank or Independent Sales Organization (ISO), and are a requirement for accepting all major credit cards. You are liable for a small fee only if you have a successful transaction on your merchant account.

Merchant accounts are useful for home businesses when:

The business is buying and selling products online

You are unable to pay costly monthly fees

Your debt history is uncertain

You want to record only successful transactions

There are several web-based companies that offer free transaction processing for new businesses whose budgets do not allow for a typical credit card processing account. You can apply for a third party merchant-account provider, paying little or no submission or monthly fees.

About the Account

When you open a home business merchant account through any organization, a merchant number is issued to your company and all types of credit cards can be accepted. Merchant accounts offer home businesses a secured payment gateway on the internet using a standard merchant account for well established home businesses. This option is cheaper if your sales figures are high because you pay less per transaction than with a third party service.

Home business merchant accounts help your business to grow because, with the expansion of internet-based business, it is nearly impossible not to accept payments online. A merchant account permits you to give your clients numerous payment options including credit cards and checking accounts, which enable payments to be made instantly and securely.