Financing Your First Business

Ready To Open A Side Business But Want To Accept Credit Cards? Find Merchant Processing Services That You Can Afford

2 May 2023

Jimmie Holland

if you are ready to start selling items to start a side business, but you aren't sure how to process credit payments and transactions, there are a few things to know to get started. You will have to find a company that offers merchant services and a merchant account.

The merchant acts as the middleman between you and the buyer. The merchant will pull the money from the account of the credit card holder and then move the funds to your merchant account. To open a merchant account, you will need to have your banking information like your routing number and financial institution information.

When choosing a merchant service, you will notice different providers have different rates and terms. These are the options you will most likely see when comparing the merchant service providers.

Flat Rate Pricing

Flat rate pricing is often the best for businesses that do a lot of small transactions. The merchant will get a set percentage of each transaction that occurs, no matter the size of the transaction. This is also an ideal option for businesses that have a low volume of sales.

Tiered Pricing

The tiered pricing model is the most commonly offered service by merchants. With this model, there will be three types of transactions:

• Qualified
• Mid-qualified
• Non-qualified

With the qualified purchases, you will receive the lowest interest rate on the charge. Since the other transactions have a higher risk, they will have higher rates, with the non-qualified rate having the highest interest charge. Some companies will advertise their lowest rate, which is the qualified rate, but it's important to get the details of all the rates and charges before choosing a merchant processor.

Interchange-Plus

The interchange-plus pricing will have two different fees that you pay. The interchange fee will be the rate that is set by the credit card processing merchant. The plus fee is a set amount that they add to each transaction. An example would be 2 percent of the sale, plus $0.20 on every transaction.

There are a lot of different merchant providers, so find the service that is going to work best for your business and that will be the most affordable. Accepting credit cards is important if you want to keep your business accessible to all types of customers. The merchant should also offer an online option for those that want to shop and purchase items from you or pay online.

Contact a merchant processing services provider to learn more. 

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