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Processing Through a Bank or MSP
Businesses can choose to accept credit cards through a traditional bank, where they are already handling deposits, checking and savings accounts, and other financial transactions, or they can choose to work with a dedicated MSP. Before making a decision, it is important to think through the pros and cons of each option. In the event that only one option is available to you, it is still a good idea to know what to expect, what you can negotiate, and how to proceed.
Bank Processors
Large banks like Bank of America, Chase, Wachovia, and others are the places you do most of your financial transactions. You are already depositing checks there, making payments with a debit card or paper checks, using their services for paying bills, and sometimes even doing your company payroll there. Oftentimes, you have been using the same bank for personal matters for years and years. Loyalty can be a big draw, especially when you are in the first stages of starting a new business. It can feel good to work with people you already know and trust.
Unfortunately, there are some drawbacks to working with traditional banks, and you should be aware of them before you begin seeking a processing contract.
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High Risk Need Not Apply: Most will not work with high risk businesses when it comes to credit card processing. This means that online companies, transactions that do not involve swiping a customer's card in person, and adult/gambling and related industries are apt to be turned away.
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Less Variety of Rates: 80% of bank-processed transactions are run through First Data Corporation, which means that one set of rates will be standard across the board with little variation. A merchant service company will be more flexible.
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Stricter Standards: When it comes to credit scores, ratings, and past history using merchant services, banks are likely to have tighter standards. They are less willing to take risks on people with no credit or a bad history, and the fact that they handle such a wide variety of
business allows them to be choosier about their partners and clients.
Dedicated Merchant Accounts
Even though it may necessitate going outside of your comfort zone or adding yet another company to the list of those with whom you are doing business, using a merchant service provider who specializes in credit card processing and nothing else can be a great decision.
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Informed Associates: While your local bank employees may have rudimentary knowledge of card processing, you can rest assured that working with an MSP means you will always be in touch with someone who understands the issues you are facing and is extremely focused on your individual needs.
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More Options: Banks typically have a small menu of services available for businesses. These may or may not suit your purposes. Merchant companies not only offer more selections but can also help you decide what is right for you. They are more experienced and more flexible. This is the whole of what they do.
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Easier Access: MSPs must work with all types of companies in order to remain competitive and successful. They are less apt to turn clients away despite less than stellar credit histories, high risk ventures, and other triggers that would cause a bank to deny you an account.
Weigh the pros and cons, and contact your bank along with a few different merchant service providers to determine which one will give you the best solution.
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