3 Options For Your Credit Card Payment Processing Needs


Option 1: Merchant Accounts Through a Bank

To take credit cards you will either need a merchant account with a bank, the services of an independent payment processor or the services of a third-party provider, such as PayPal or Google Checkout. Which of these you decide to work with depends upon your business volume, where you sell your goods or services, your credit rating and other factors.

It can be difficult for a start-up business, home business or someone with less-than-perfect credit to get a merchant account at a bank.

What the Bank May Ask For

  • A business license.
  • Articles of incorporation.
  • An application with basic contact and business information.
  • A U.S. bank account
  • A voided check or a letter from the bank on official letterhead verifying your account.
  • Tax identification application form (W-9 or SS-4 form).
  • Proof that the business is physically located in the U.S. This means the business must have a physical street address that can be verified, not just a post office box.
  • Personal and business financial statements for the past two years.
  • Processing statements from the last six months.

The Decision

Once the bank has the paperwork, you can expect a decision in within a week or so.

An Important Note

It’s important to know that banks often use independent credit card payment processing companies to maintain their (the bank’s) merchant accounts. This means that even though you took the time to jump through the bank’s hoops to get a merchant account, your account is being managed by another company (that you could have gone through directly without a lot of “hoop jumping.”)

Best-Suited For

If you are a well-established, brick-and-mortar business, have good-to-excellent credit and a larger sales volume, a bank merchant account may be for you.

Option 2: Third-Party Payment Services

Businesses who sell occasionally or have a low monthly volume may want to consider using a third-party provider, such as PayPal or Google Checkout. In these cases, it may be the best value for your money. A basic account is free and does not require any kind of credit check.

Downsides of Using Third-Party Payment Services

The downside of using a free third-party payment service may include:

  • Integrating the payment system with your site is your responsibility.
  • The customer is redirected to the PayPal or Google Checkout site to pay and then redirected back to your site to complete the purchase. This might be confusing for some people.
  • Your account will be frozen and inaccessible if a customer disputes a charge. You may not be able to access your money for days or weeks until the dispute is resolved.

Option 3: Independent Credit Card Payment Processors

The third option for your credit card payment processing needs is the independent processor. Unlike the bank, the application and other paperwork required by the independent processor are much less stringent. and most legal businesses are approved.

The Application

The application generally asks for the following information:

  • Your name and contact information.
  • Your business name and contact information (this can be the same as your personal information.)
  • Your federal tax ID number or social security number.
  • Your bank account and routing number.
  • The type of product you sell and where you sell it.
  • Your vendors or suppliers.
  • Your method of advertising (catalog, direct mail, TV/radio, online, etc.)
  • How the customer orders (online, at your store, etc.)
  • Who you use for shipping.
  • How long it takes for processing and delivery.
  • Your return policy.

Approval is quick – sometimes within hours of the application.

The Benefits

The benefits of working with an independent credit card payment processor include:

  • Easy and quick application and approval for almost every legal business, including those labeled “high-risk” or a poor credit rating.
  • Low rates tailored to your individual business needs.
  • Free terminal or software, if needed.
  • Free reprogramming of existing terminals, if needed.
  • Accounts are not frozen if a customer disputes a charge.
  • No monthly or annual fee.
  • You are eligible for a merchant cash advance up to $250,000.
  • Operate your business domestically or off-shore.

As a rule, the most economical option for credit card payment processing for small- to-medium-sized businesses is the independent processor.

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