Funding Options for Your Small Business: Merchant Accounts

The actual process of applying to be a merchant account holder is basically the same as applying for a business loan. Essentially, the merchant account is offering your business a funding option, and they will be in charge of all the transaction charges that pass through your doors so they will also be a party to fraudulent charges and unpaid debts.

Their basic requirements are mainly for verification purposes to make sure that their account holders are operating legitimate businesses.

Like a credit application, the credit card processing application will ask for your business’ financial information. The processing companies will seek references from your past vendors, and basic history to make sure that your company’s account will not be subject to fraud allegations and charge backs.

If your business is looking to upgrade from a previous merchant account, your new processing company will want to check with your old provider as well. This will be a basic assessment of your credit card volume and your business’ financial history. It is unlikely that poor credit history will limit your chances with a provider - however you will likely be subject to additional fees if your business is deemed "risky."

By keeping this in mind when you are shopping, you can not only find the best fit for your business options but also evaluate your company for changes that may benefit your practices in the long run. Taking the time to evaluate your credit card revenue’s gains can help you figure out if hiring a third party merchant account will outweigh any fees that may occur.

David Liu is a writer and comedian based in San Diego, California. He writes extensively for Resource Nation, an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs.

Resource Nation provides free tools, tips, and purchasing advice for business owners and entrepreneurs in over 100 business categories ranging from phone systems to credit card processing. Whether it's connecting businesses with local and national pre-screened vendors, or offering easy service comparisons on a VoIP service, Resource Nation empowers business decision makers by providing the information they need to make smart choices.