Applying for a Free merchant account (an overview)

"I'd like to start selling photography equipment online, and my clients keep on insisting to pay with credit cards but truth be told, I have nooo idea how to go about it"

If you want to accept credit cards in your online business but are consistently rejected for your own merchant account, then a free merchant account is for you. What do you need to know about free merchant accounts? Here are the basics.

First off, a merchant account is an account with a bank that allows you to accept credit card payments. This means you can tell your customers to pay either in cash or use that little plastic card in their wallets. There are two kinds of merchant accounts for the two different kinds of transactions:

Card present transactions
Card present transactions means at the point of sale(POS), the credit card can be swiped on a physical terminal. Think Borders bookstore along El Paseo.

Card not present transactions
Card not present transactions means a credit card cannot be physically seen as well as swiped. Mail Order/Telephone(MOTO) merchants & Internet merchants fall under this category. There is no physical storefront or POS. Applicants of a free merchant account usually fall under card not present transactions.
A free merchant account is obtained through a third party processor. The third party processor allows other merchants to share their own merchant account. Merchants who avail of a free merchant account are usually rejected first by banks or brokers, or are either start up businesses who don't have enough money to get their own merchant account yet.
Requirements of a free merchant account
Applications can be quick, or drag on for days depending on your responsiveness to the requirements (& how quick your agent can arrange for a merchant account). Here are some items needed to apply for a free merchant account.
* Accomplished Merchant Application & Agreement
* A business checking account
* Articles of Incorporation or Incorporation Documents
* Valid Identification Papers ( e.g. Passport, Drivers License)
* Business License
* Voided Checks
* Bank Letter with Beneficiary Name
* Web site URL
* Statement of your return policy
Fees of a free merchant account
Like banks & brokers, free merchant account providers charge merchant fees.

* Discount rate (around 2-4% of transactions)
* Transaction fees
* Monthly processing fees
Other fees you might incur include one time application fee, AVS(address verification fee), statement fees, return fees, reserve fees, & chargeback fees.
Before you sign up, keep these tips in mind
  • Make sure you're getting a free merchant account from a reliable company. Scour the Internet for any good or bad reviews for providers.
  • Review your options. If it means going through several providers & reading each & every offer sheet, then so be it. Look at the charges & read the fine print.
  • Don't give your go signal (in fact, your signature) if they can't answer your questions. If they can't answer your questions now, how can you expect them to answer your questions down the road?
Just like any decision you have to make in life, reviewing your options, doing your homework, & carefully reading the offer sheet of your free merchant account provider can very well be worth all the time spent making that decision.

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