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At some point, every business needs to skip right over the online payment processors and sign up for their very own merchant account. A merchant account is simply an account that allows you to process credit cards (and sometimes checks) via phone, online or in person with the funds being deposited directly into your account (minus fees).

I opened an account at National Bank Services recently, so I’m going to use them versus one of their major competitors and walk you through the research I did before opening an account.

Fees
You’ll have more of an up-front cost, but over the long haul you’ll save money using a merchant account because the percentage and fee they charge for each transaction is lower than that of online payment processors.

Let’s take a look at some of the fees you’ll incur both up-front and on an on-going basis with a merchant account.

Set-up Fees:
NBS – Free
Authorize.net – $99

Monthly Gateway Fee:
NBS – $8
Authorize.net – $20 + $10 recurring billing ($30 total)

Transaction Fee:
NBS – $2.19 + $0.10
Authorize.net – $2.19 + $0.35

Security
All major merchant accounts should not only offer encrypted use of their site, it should be the default option. The easiest way to see if you’re using a secure portion of the site is to check the URL and confirm that it begins with “https:/” rather than “http:/”. This isn’t an issue as much anymore, but if you are the tin-foil type, or deal in a high-security-type business be sure to chat with a representative or search the site to make sure they not only have a secure socket layer (SSL) encryption but also at least 128-bit encryption, which is the minimum standard for storing financial data. This shouldn’t be a problem, as merchant accounts are highly regulated and most should have the bare minimum of security requirements. Be sure to check with them before signing up for an account.

The second level of prevention would be fraud prevention. My account at NBS verifies that the credit card matches the address it is attached to as well as the name, phone number, etc. Authorize.net will still allow you to process transactions from cards that don’t match the information of the owner. For example, someone in St. Louis gets their card stolen and someone in Baltimore attempts to use it not knowing the personal information attached to the card (phone number, address, etc.). National Bank Services wouldn’t authorize the transaction, which is something I liked a great deal. Authorize.net pre-authorizes the card for the amount anyway, which “holds” the money being used for the payment. In a litigious society, I’d rather not be the middleman for credit card fraud.

Cards Accepted
Visa and Mastercard are accepted everywhere. American Express is a card that is gaining in popularity due to its exclusive status and higher purchasing limits and Discover card users are amongst the most loyal of any credit card holder. Discover offers great benefits to their users so most of them are going to want to use the card whenever possible.

NBS allows me to set up Discover and American Express payments without an additional set-up fee.

Authorize.net doesn’t accept payments from Discover or American Express by default. What’s worse is that they do accept payments from both, but they don’t make it easy to find out how. I sat on hold for nearly 25 minutes, and then had to wait as an operator put me on hold multiple times to check into this. I was finally told, “Yes, we can accept them with an additional set-up fee.” When asked about this fee, I was put on hold again and when the operator came back they informed me that it would be an additional $25 for each. A total of $50.

Now, this is a bare minimum of what you need to look for when signing up for a merchant account. The goal here wasn’t to lay it all out (that would take a book) but to give you a peek into the research I did before choosing NBS as my merchant account.

Happy searching!