THINGS TO NOTE WHEN CHOOSING THE RIGHT MERCHANT ACCOUNT PROVIDER

Every business owner aim to succeed in their respective businesses, they want to increase their sales and make more money.
The best way to do this is to offer your customers the ability to pay for merchandise with their credit cards or debit cards. Whether you operate your business in a physical location or online-only, allowing customers the option of credit card payment is logical. You will increase sales because of the convenience of the payment options you offer. The vast majority of shoppers, online and in person, prefer to pay with their credit cards. Opening a merchant account is the way to give your customers more payment options. But it is important that you find out as much as you can about merchant accounts and merchant account providers.

First and foremost let look at the word “Merchant”
What is a merchant account?
A merchant account is an account that enables merchants to accept credit card payments. Any merchant who wants to take credit card orders must establish a merchant account. A merchant account can be obtained through a bank, credit card Company, or the direct payment processor. Keep in mind that banks are not merchant providers; they use third parties to set up merchant accounts. Once you are set up with a merchant account you will have the ability to
accept all forms of payments including credit cards, debit cards and electronic checks.

A merchant account is set up through a bank or an online merchant account provider for a retail or online organization in order to accept credit cards as payment from customers. A merchant account is not a bank account. The merchant account provider's job is to place the money you earn from credit card sales into your bank account. It used to be that merchant accounts were only offered by banks and providers to retail businesses that were located in a physical location. But with online shopping gaining popularity over the past several years, merchant account providers have started providing accounts to online business owners as well. Even though most banks still do not provide online merchant accounts due to the constant concern over credit card fraud, there are an increasing amount of online merchant account providers that offer services especially to those merchants that market their products online. Because of the high number of merchant account providers out there, it is important that you research all aspects of them, what services they provide, and especially the costs they impose, so that you don’t lose precious profits.

When looking into merchant accounts and providers, be aware that there are two types payment processing that they will offer. These are manual and real-time processing. Manual processing requires that the credit card number be delivered through a phone transaction, fax transaction, or an online order form. The order is processed manually by contacting the payment processing company (through an Internet connection) to verify the credit card number, or by using a point of sale machine to swipe the card at the time of purchase. This type of processing is more secure, less costly, and ideal for a low-volume merchant in a physical store location. Real-time processing is perfect for web-based merchants because the credit card is immediately processed at the time an order is placed. Pending verification and approval of the credit card, the customer receives notification (via e-mail) that his or her order is accepted and fund transfer is approved. This is the less secure of the two processing options.

5 Essential Factors
Starting to accept credit cards and debits cards at your business can be a challenging task. The Card Processing Industry is highly competitive, with many companies offering a broad range of services it is important for any business considering Merchant Services to understand these important factors; Benefits, Equipment Costs, Rates, Types of Processing and Terms of the Agreement e.t.c.

1. The many ways a merchant account will benefit your business.
•Boost Sales
Most everyone pays with credit or debit cards. Our society is all about convenience. If you make it easy for your customers to pay they will appreciate it. Most all businesses find an immediate increase in sales after they start accepting credit cards.
•Receive Immediate Payment
Rather than waiting for weeks or months to receive payment, funds will be deposited directly into your account in a matter of days. Money goes directly into the checking account of your choice.
•Reduce Staff Overhead
In receiving payment via credit card your business forgoes excessive time spent in sending overdue notices and making awkward phone calls to request payment.
•Avoid Non‐Payment
Many business owners are reluctant to pay a small percentage of profits to credit card processing companies, however, most find that the service quickly pays for itself in avoiding loss from non‐payment.
•Expanded Customer Base
The modern consumer expects to be able to pay via credit card and is often without cash, check, or other means of payment. Credit Card processing is a convenience for your customers and a professional foot forward for your company
•Go Virtual
Business has moved online. With the Internet, small and large businesses alike can have a global customer base. However, credit card processing is a requirement for effective ecommerce.
•Auto Charge Your Clients
For customers or clients on a revolving payment schedule it is usually easier for them and for your business to simply auto charges their credit cards each cycle.

2. Equipment Costs
•Buy
When you buy equipment you have complete control over the machine, but you are stuck with equipment that you have to maintain and update yourself. This also raises the start up costs tremendously.
Expensive Start Up
Buying equipment can be expensive. Terminals can cost up to $1,000. If you are looking for low start up costs this will not be the right option for you.
Training
You want to make sure that training of some form is included with your purchase. A quick introduction to using the advanced features of your terminal can help you get your money's worth.
Keeping Up With Technology
You don’t want to get stuck with an out‐dated machine. Technology is constantly changing and you want to keep up‐to‐date with the changes. You want to make sure the machine is compliant and can be used with the processor of your choice.

•Lease
A lease payment will often cost you far more than purchasing your equipment outright. You could be paying more than the machine is worth and usually you have to enter into some sort of contract. Make sure to read the entire contract.
No Replace or Repair
Most leasing companies specifically state that they have no responsibility to replace or repair your equipment should something go wrong. Many merchants enter into lease agreements thinking that they can get a warranty or service from the leasing company, and this is rarely true.
Hidden Fees
You should be especially aware of agreements that give the lease company authority to debit your account for additional fees for insurance at their discretion.
Know the Agreement
Many merchants lose track of their agreements over time and continue to pay monthly lease installments long after the lease term has expired. Don’t assume that your sales person will notify you at the end of your lease term. The lease company will continue to charge you, or even worse, renew your lease for another 48 to 60 month term. Be sure and send notice of intent to cancel or buyout at least 60 days prior to your lease expiration.
Locked In
Can I use this equipment with any processor? Some terminals are proprietary to a specific processor or network. You could end up paying thousands of dollars for a terminal that you cannot use with any other processor should you choose to change providers. Remember, changing processors has nothing to do with that third party lease. Even if you buy new equipment, you will still be responsible for the lease terms in your agreement. Be sure and ask
lots of questions when considering leasing options.
•Free
This is probably the best option for you and your business. If a company is offering free equipment you can take advantage of the low start up fees, new equipment and training that is often offered with a high quality merchant account processor.
Low start up
This can be a great option if you are looking to get set up to accept cards with no expensive upfront cost. You won’t have to worry about a chunk of money that is associated with buying a machine and you won’t have a monthly fee for leasing the machine.
You don’t own the machine
This is similar to the cell phone industry if you sign up for the service you receive a new phone at no extra cost. Usually the company will still own the machine if you want to cancel your contract. Even with a termination fee you will still save money by taking advantage of the free use of the machine.
New Equipment
With a quality processor you will have the most up‐to‐date equipment and they will make sure that it is compliant with of the latest upgrades. This can save time and money in the long run.

3. Rates & Common Fees
There are many different rates to consider when you are talking about credit card processing. If a processor offers you one flat rate you should look deeper into the actual contract to make sure you fully understand what the processor is charging. Make sure you have clear communication with your merchant account processor about fees and ongoing costs. Some typical fees include the following.
•Set up Fee: A onetime fee for starting a merchant account.
•Statement Fee: A fixed monthly fee that virtually all processors charge for your monthly statement
Provided to show how much processing you did in the previous month.
•Transaction Fees: Fee the merchant has to pay per transaction.
•Discount Rate: Flat percentage charged for every transaction
•Pin Based Debit: PIN Debit is a transaction in which the customer uses a debit card and enters in their PIN
Number. This functions essentially as an ATM transaction and the merchant pays a per item fee and PIN Network Fees for each transaction.
•Qualified Rate: The rate a merchant pays on a swiped transaction conducted face‐to‐face with a signature where the full contents of the magnetic stripe were read. Usually includes all consumer credit cards (and debit cards if a separate category for swiped Debit is not set up in the billing). These are the lowest risk transactions so they carry the lowest discount rates.
•Mid Qualified Rate: A higher rate than Qualified which is charged to merchants for processing a hand‐keyed transaction from consumers (and sometime rewards cards also cleared as a midqualified).
There can be a mid‐qualified rate for credit, debit, rewards cards, and more.
Primarily these are consumer cards which are hand‐keyed and meet all other requirements of Interchange.
•Non‐Qualified Rate: The highest rates charged to merchants. The transactions are typically swiped or keyed for business or corporate cards. Additionally, Visa transactions where a consumer cards are hand‐keyed without AVS will Downgrade to Non‐Qualified.
•Termination Fees: If you terminate your contract early this is the fee you are charged to get out of your contract.
•Monthly Minimum: The minimum amount the processor needs to have in fees. As long as your credit card processing meets or exceeds the minimum amount then you will not be charged. If your monthly fees are less than the minimum then you will be charged the difference.
Get it documented.

All of the above fees should be disclosed in writing at your request. Once you have a basic understanding of all the associated fees, you will have the knowledge necessary to obtain the best deal possible. Unfortunately, business owners often research only the difference in percentage rates. This is meaningless if the savings disappear in higher fees hidden elsewhere.
Every account is different and you need to speak with a knowledgeable sales person who can set your business up with the proper processing solution.

4. Find the Right Processing Solution for Your Business
Getting set up with the proper processing solution is very important. This alone can save you money by having the best rates for the types of cards your business accepts and through how you will be accepting the card.
Retail Solutions
For most retail businesses, including stores, hotels, restaurants, etc., the most suitable option for credit card processing is a simple landline terminal. This traditional point of sale system is set up phone line or IP. For face to face transactions, this is the best option for your business.
Wireless Solutions
If your business is mobile, and being tied to a storefront or landline is not an option, then wireless solutions may be what you need. The wireless terminal can process credit and debit cards wherever there is an available cell phone signal.
Internet Solutions
The fastest growing segment within the credit card processing industry is in online transactions. There are many different types of online gateways that will help your business begin accepting credit cards via the internet. Through web access and a secure website, you will be able to manually process credit card transactions from orders received offline, issue credits, void transactions, and view your online list of transactions, from any internet connection in the
world.

5. Terms of Agreement
Every merchant account provider is going to require some type of contract. This is going to be a very important factor in choosing a merchant account provider. You want to make sure you read the entire contract including all of the fine print to make sure you understand the entire offer.
Ask for the offer in writing
You need to have a copy of the agreement before you start a merchant. If you speak to someone on the phone ask them to email or fax you the application to make sure you have all the information.
Rate Disclosure
Make sure all of the rates are disclosed in the contract. Be very cautious when the rates are not listed, because you may run into some hidden fees.
Termination Policy
How long does the contract last? How much is the termination fee? Some companies offer a trial period and most all companies have a termination fee, similar to cell phone contracts.
Sales Representative
Can your sales representative explain the contract? You want to make sure you are dealing with an experienced representative; this alone can save you money. Ask relevant questions to make sure they are helpful and can set your account up properly.

Lastly
When you are ready to accept credit and debit cards and you are researching merchant account providers, make sure you keep all of the following factors in mind.
More than likely, you will have a long relationship with your merchant account provider. Therefore, you should have the utmost trust and confidence in them. Your provider should offer various services that will give you options in making your business transactions run smoothly. They should be able to accommodate several brands of credit cards (Visa, MasterCard, Discover, American Express, etc.), in addition to providing other payment alternatives, such as PayPal. They should have a record of impeccable service and reliability. They should also be first-rate customer service providers. Any problems should be handled discreetly and quickly. Despite the seeming necessity of having a merchant account provider, it can make or break your business with its fees and service. That is why it is important to know the ins and outs of a merchant account provider, and to choose one carefully

Pricing Strategy a tool to position your company ahead of others

Taken a glance back to the last issue of the of Marketing Canada journal, summer 2009, vol 5, issue 3, I deal on the topic, “How Effective and Efficient is your Pricing Strategies” Today we will be going forward to see what pricing strategy can do to your business; how much should you charge for your products and services.
Pricing as be said over time as one of the most difficult, yet important part of a company strategies , issues you must face as a company is how much to charge for your products and services. Basically there is no one single right way to determine your pricing strategy, but there are some reasonable guidelines one need to follow in arriving at a pricing decision.
Let take a look at the definition of pricing again to have a clearer view of the topic.
What is pricing? Pricing is a method adopted by a firm to set its selling price. It usually depends on the firm's average costs, and on the customer's perceived value of the product in comparison to his or her perceived value of the competing products.

What is pricing Strategies? Price planning that takes into view factors such as a firm's overall marketing objectives, consumer demand, product attributes, competitors’ pricing, and market and economic trends.
The pricing strategy of your business can ultimately determine your fate. As a business owner you can ensure profitability and longevity by paying close attention to your pricing strategy.

Before we go further, let quickly look at some factors the company need to consider:

Positioning - How are you positioning your product in the market? Is pricing going to be a key part of that positioning? If you're running a discount store, you're always going to be trying to keep your prices as low as possible (or at least lower than your competitors). On the other hand, if you're positioning your product as an exclusive luxury product, a price that's too low may actually hurt your image. The pricing has to be consistent with the positioning. People really do hold strongly to the idea that you get what you pay for.

Demand Curve - How will your pricing affect demand? You're going to have to do some basic market research to find this out, even if it's informal. Get 20 people to answer a simple questionnaire, asking them, "Would you buy this product/service at Price X? Price Y? Price Z?" For a larger venture, you'll want to do something more formal, of course -- perhaps hire a market research firm. But even a sole practitioner can chart a basic curve that says that at Price X, X' percentage will buy, at Price Y, Y' will buy, and at Price Z, Z' will buy.

Cost - Calculate the fixed and variable costs associated with your product or service. How much is the "cost of goods", i.e., a cost associated with each item sold or service delivered, and how much is "fixed overhead", i.e., it doesn't change unless your company changes dramatically in size? Remember that your gross margin (price minus cost of goods) has to amply cover your fixed overhead in order for you to turn a profit. Many entrepreneurs under-estimate this and it gets them into trouble.

Environmental factors - Are there any legal or other constraints on pricing? For example, in some cities, towing fees from auto accidents are set at a fixed price by law. Or for doctors, insurance companies and Medicare will only reimburse a certain price. Also, what possible actions might your competitors take? Will too low a price from you trigger a price war? Find out what external factors may affect your pricing.

What next the company needs to do is to determine the pricing objectives. That is the aim of your pricing?

Short-term profit maximization - While this sounds great, it may not actually be the optimal approach for long-term profits. This approach is common in companies that are bootstrapping, as cash flow is the overriding consideration. It's also common among smaller companies hoping to attract venture funding by demonstrating profitability as soon as possible.

Short-term revenue maximization - This approach seeks to maximize long-term profits by increasing market share and lowering costs through economy of scale. For a well-funded company, or a newly public company, revenues are considered more important than profits in building investor confidence. Higher revenues at a slim profit, or even a loss, show that the company is building market share and will likely reach profitability. Amazon.com, for example, posted record-breaking revenues for several years before ever showing a profit, and its market capitalization reflected the high investor confidence those revenues generated.

Maximize quantity - There are a couple of possible reasons to choose the strategy. It may be to focus on reducing long-term costs by achieving economies of scale. This approach might be used by a company well-funded by its founders and other "close" investors. Or it may be to maximize market penetration - particularly appropriate when you expect to have a lot repeat customers. The plan may be to increase profits by reducing costs, or to upsell existing customers on higher-profit products down the road.

Maximize profit margin - This strategy is most appropriate when the number of sales is either expected to be very low or sporadic and unpredictable. Examples include custom jewelry, art, hand-made automobiles and other luxury items.

Differentiation - At one extreme, being the low-cost leader is a form of differentiation from the competition. At the other end, a high price signals high quality and/or a high level of service. Some people really do order lobster just because it's the most expensive thing on the menu.

Survival - In certain situations, such as a price war, market decline or market saturation, you must temporarily set a price that will cover costs and allow you to continue operations.

Note: it is important after having the information so needed and clear what we are trying to achieve, then we take a look at the pricing methods to help us achieve our real numbers.
Below are the Pricing Methods to consider

As mention earlier, there is no "one right way" to calculate your pricing. Once you've considered the various factors involved and determined your objectives for your pricing strategy, now you need some way to crunch the actual numbers. Here are four ways to calculate prices:

Cost-plus pricing - Set the price at your production cost, including both cost of goods and fixed costs at your current volume, plus a certain profit margin. For example, your widgets cost $20 in raw materials and production costs, and at current sales volume (or anticipated initial sales volume), your fixed costs come to $30 per unit. Your total cost is $50 per unit. You decide that you want to operate at a 20% markup, so you add $10 (20% x $50) to the cost and come up with a price of $60 per unit. So long as you have your costs calculated correctly and have accurately predicted your sales volume, you will always be operating at a profit.

Target return pricing - Set your price to achieve a target return-on-investment (ROI). For example, let's use the same situation as above, and assume that you have $10,000 invested in the company. Your expected sales volume is 1,000 units in the first year. You want to recoup all your investment in the first year, so you need to make $10,000 profit on 1,000 units, or $10 profit per unit, giving you again a price of $60 per unit.

Value-based pricing - Price your product based on the value it creates for the customer. This is usually the most profitable form of pricing, if you can achieve it. The most extreme variation on this is "pay for performance" pricing for services, in which you charge on a variable scale according to the results you achieve. Let's say that your widget above saves the typical customer $1,000 a year in, say, energy costs. In that case, $60 seems like a bargain - maybe even too cheap. If your product reliably produced that kind of cost savings, you could easily charge $200, $300 or more for it, and customers would gladly pay it, since they would get their money back in a matter of months. However, there is one more major factor that must be considered.

Psychological pricing - Ultimately, you must take into consideration the consumer's perception of your price, figuring things like:

Positioning - If you want to be the "low-cost leader", you must be priced lower than your competition. If you want to signal high quality, you should probably be priced higher than most of your competition.
Popular price points - There are certain "price points" (specific prices) at which people become much more willing to buy a certain type of product. For example, "under $100" is a popular price point. "Enough under $20 to be under $20 with sales tax" is another popular price point, because it's "one bill" that people commonly carry. Meals under $5 are still a popular price point, as are entree or snack items under $1 (notice how many fast-food places have a $0.99 "value menu"). Dropping your price to a popular price point might mean a lower margin, but more than enough increase in sales to offset it.
Fair pricing - Sometimes it simply doesn't matter what the value of the product is, even if you don't have any direct competition. There is simply a limit to what consumers perceive as "fair". If it's obvious that your product only cost $20 to manufacture, even if it delivered $10,000 in value, you'd have a hard time charging two or three thousand dollars for it -- people would just feel like they were being gouged. A little market testing will help you determine the maximum price consumers will perceive as fair.


HOW TO COMBINE ALL THESE CALCULATIONS TO COME UP WITH A PRICE.

Your price must be enough higher than costs to cover reasonable variations in sales volume. If your sales forecast is inaccurate, how far off can you be and still be profitable? Ideally, you want to be able to be off by a factor of two or more (your sales are half of your forecast) and still be profitable.

You have to make a living. Have you figured salary for yourself in your costs? If not, your profit has to be enough for you to live on and still have money to reinvest in the company.

Your price should almost never be lower than your costs or higher than what most consumers consider "fair". This may seem obvious, but many entrepreneurs seem to miss this simple concept, either by miscalculating costs or by inadequate market research to determine fair pricing. Simply put, if people won't readily pay enough more than your cost to make you a fair profit, you need to reconsider your business model entirely. How can you cut your costs substantially? Or change your product positioning to justify higher pricing?
Pricing is an important factor in determining the success of the company, you’re certainly going to make a profit on your products and services are taken the right step in pricing decision. Always remember something is ultimately worth only when someone is willing to pay for it.