Small Business Credit Card Processing

The latest article I just uploaded to HubPages shows the difference between a business that accepts credit cards vs. a competitor that doesn't.

It reveals the "winner" of these two competing schools of thought:
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1) A Merchant Account is Necessary, it's a Cost of Doing Business (investment)

vs.

2) A Merchant Account is NOT Necessary - Your Expenses Will Outweigh any newfound profits as a result... (loss)

Obviously, the validity of each statement varies depending on the nature of the business.

Let's take a look at how this "competition" applies to two identical plumbing services that don't fit into the traditional "swipe" merchant category...

HubPages Comparison of Two Businesses

It used to be that the only way to accept credit cards as a lawyer, a contractor, a plumber - or any other type of profession that required mobility and on the spot payments - was to get a REGULAR merchant account (usually with an expensive terminal you'd never use) and then either carbon-copy the card with a smaller "copy" machine, or call your merchant account's direct line, wait on hold for a few minutes, and then talk to someone at a call center who would process your payment...

Now, I don't know about you - but that sounds like a whole lot of hassle (and expense) for something you might only be using a couple times a week - or month.

Fortunately, there's a few smart people in the merchant industry that have caught on to this inherent need, and they've developed an automated, simple and affordable way to accept credit cards using any touchtone phone (or cell phone).

The major advantages are as such:
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* Costs a FRACTION of what you'd spend for a traditional merchant account

* Process payments in seconds, not minutes - fully automated

* Automatic Transfers to your bank account

* "Pay as you go" system, being as the only *real* cost you'll incur is the discount rate on each sale

* Process very large transactions - very handy for lawyers, contractors and other professionals that have high-ticket averages

The predominant mobile service like this is currently "Accept by Phone", based out of Columbus Ohio.

To give you an idea of the flexibility and afford-ability of this type of merchant account, here's a breakdown of what you'd pay to use Accept by Phone:

1-Time Setup Fee (once approved): $99.00

Monthly Fee: $5.00/mth

Discount Rate: 3.95% per sale

(Taken from their Account Details page)

And there's no monthly minimums, no transaction fees and most importantly, they don't lock you into a minimum term with a cancellation fee.

With a traditional merchant account - after paying your initial costs to set it all up - it would cost you around $60 a month MINIMUM, even if you didn't process a cent. With a service like Accept by Phone, you're only paying $5.00 a month.

So if you've been looking for a reasonable way to accept credit cards that suits the mobility of YOUR business - then this is your Holy Grail, so to speak...

It's time to get your own Mobile Merchant Account

When you really think about it, your client's credit card is actually acting as a sort of "intermediary" when they purchase something from you.

They benefit from this sort of "escrow" transaction because if the product or service isn't received, they'll most likely be able to place a chargeback.

And YOU benefit, because you'll be able to more easily obtain larger amounts of money up-front, without having to rely on the "honor system" in terms of waiting for checks or scheduling cash payments.

It's also more convenient, and mysteriously less painful for your client.

RJon discusses the spin-off benefits of the above points and describes how simply accepting credit cards can boost profitability in substantial measures due to A/R reduction, ease of payment and smoother-sailing in terms of "unspoken" tension between client and attorney.

(Keep in mind that the article applies to all professions and small businesses - not just law firms)

So I'll stop rambling now and let you read it for yourself:

Why Law Firms NEED to Accept Credit Cards

PayPal, 2CheckOut, ClickBank, CCNow, and other similar quasi-merchant accounts (third parties) all seem like the ideal way to get started processing payments because of their low barrier to entry.

Anyone can join, and there's basically NO approval process. Your credit rating will definitely NOT be investigated to get a free PayPal account...

Now, granted, basically all but PayPal have extremely high discount rates that take a LARGE chunk of the profits from any transaction to cover the cost of "liability".

So let's compare PayPal with getting a REAL merchant account...

And actually, there's already an article written about this, so I'll save my breath and let YOU read it for yourself:

Merchant Account or PayPal - Which is Better?