I am among the 61 percent of Americans who believe that the US economy is currently in a downward slope, heading towards a recession or already at the point. Consider the astronomical number of foreclosures, escalating real credit card debt, ever-increasing consumer pricing (with particular concern about skyrocketing gasoline pricing and its domino industry effect), lagging personal income, rising unemployment or underemployment rates … and its easy to agree with the pundits who proclaim that all is not well with our recessing economy.

Despite the unsettling news or perhaps because of it, thousands of merchants across our nation continue to blaze an entrepreneurial path, opening up businesses, cutting a swathe along every conceivable niche. Most of these new business owners will realize the necessity to accept credit cards, and consequently, need to establish merchant accounts. (Consumer credit card use naturally increases during difficult economic times and merchants must accommodate their customers preferred method of payment.)

Knowing the importance of obtaining credit card processing capability, merchants engage in an exercise of due diligence in an attempt to find the best merchant account to satisfy their needs. Here are some criteria to consider when weighing options in the midst of turbulent economic
times:

1) Associated credit card fees – This is an obvious consideration, particularly when business profit must be maximized. As comparisons are performed, all rates must be considered, particularly the discount percentage assessed to qualified, mid-qualified, and non-qualified transactions. Of course, other fees come into play, such as start up, monthly, and annual costs. By comparing apples to apples, merchants may reap the seeds of greater profit;

2) Monthly minimum expense – Many credit card companies charge a monthly minimum – a certain amount of processing a merchant must reach to cover the merchant account provider’s cost. For example, if the monthly minimum is $25 and the merchant has only attained a processing amount of $15 (calculated by taking the discount rate times the associated transaction dollar amount), the merchant would be responsible for an additional $10
that month. This can add up over time and take a bite out of crucial
profit. Many new businesses, particularly during slow economic cycles, experience financial hardship during the first year, and it need not be compounded with unnecessary credit card processing expenses;

3) Cancellation or termination fee – While some merchant account providers waive this cost, many assert that it is a valid charge due to the expenses incurred by the processor. But the cancellation / termination fee can run into hundreds or even surpass the $1,000 threshold. While business owners need to maintain a sense of confidence and optimism, the stark reality is that many businesses will fold … and with greater frequency in a depressed
economy. Other merchants may simply grow disenchanted with their present
merchant account provider, and look for a better solution, usually to cut
costs. As such, a cancellation / termination will only serve as a financial albatross to the merchant;

4) Chargeback expense, policies, and procedures – As the growing financial crunch bears its adverse effects to all, there is simply a greater likelihood that customers will initiate chargebacks, disputing a given charge. Merchant account providers typically assess a fee due to the ensuing investigation. Business owners should know what the fee is (the lower the better), and even more importantly, the merchant account provider’s chargeback policies and procedures. Some merchant account providers are very supportive in helping merchants navigate the process; others are very indifferent and may have policies that are not
merchant-friendly (e.g., a tendency to freeze accounts). It is important to find out your merchant account provider’s modus operandi with chargebacks; and finally, consider ...

5) Customer support – Regardless of your choice of provider, it is important for you to learn the facets of credit card processing. Agents must truly enlighten merchants and hasten the learning curve. After all, in difficult economic times, merchants cannot afford to waste time on trying to figure out or solve problems stemming from their merchant account. There must be a quick resolution so merchants can concentrate on their core competency. Any independent sales organization or agent must provide fast, reliable service, and be available for any problems that crop up.

Despite down markets, merchants can recession-proof their business, and one way is to choose the best merchant account using the aforementioned criteria.

Andy Lax has worked in the credit card processing industry for over five years and is now an Account Manager at IntelliCollect, a merchant account provider that enables business owners to accept credit cards and electronic checks.

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