11 Things to Look for in Merchant Accounts for Small Businesses

Things to Look for in Merchant Accounts for Small Businesses

Small business owners have unique needs when it comes to merchant accounts for credit card processing. In contrast to high-volume businesses that have a consistent monthly turnover of €90,000 or more, small businesses often have a local or niche customer base, an uncertain monthly turnover and seasonal fluctuations, making it essential for them to partner with a merchant account provider who can offer the flexibility they need.

When looking for a credit card processing company for a small business, business owners should look for a provider that:

  1. Offers industry-leading security features
  2. Provides regulatory support
  3. Underwrites your merchant account
  4. Has a highly responsive customer service team
  5. Accepts a wide range of payment methods
  6. Offers fraud protection and chargeback mitigation
  7. Offers sales reporting, data and analytics
  8. Settles earnings to your business bank account quickly
  9. Is transparent about its pricing structure
  10. Has multi-currency capabilities
  11. Can scale with you as you grow

1. Industry-Leading Security Features

As soon as you begin to accept credit card payments on your website or in-store, you are legally obligated to comply with the payment card industry data security standards (PCI-DSS).

When looking for a merchant account provider, look for one that is PCI-DSS compliant and preferably one that will keep customer credit card information off your system entirely so that you don’t have to worry about legal liability in the case of a breach.

Specific Security Features to Look For

A secure virtual terminal or global payment gateway must have:

  • Full PCI-DSS compliance
  • A secure sockets layer (SSL) or transport layer security (TLS) certificate
  • End-to-end encryption using SHA-256, or similar
  • A system that can store each customer’s credit or debit card details securely for safe recurring payments

2. Support with Regulatory Requirements

Businesses in different countries and regions are subject to different regulatory requirements when it comes to accepting electronic payments, collecting customer data, the use of cookies and so on.

To make sure that you follow all of the relevant regulations governing digital transactions in your country, it’s critical to partner with a merchant account provider that is knowledgeable and can keep you compliant without increasing your administrative burden.

Unicorn Payment, for example, helps its European merchants comply with the General Data Protection Regulation, the EU E-Commerce Directive and the most up-to-date version of the Payment Services Directive. The fines for a data breach in Europe can be as high as €10 million or even €20 million (potentially more for groups of entities) per incident, which for small businesses could be a financial death sentence.

3. Completes a Thorough Underwriting Process

In addition to ensuring that your company data and your customers’ payment data are secure and that you comply with electronic payment laws, you also need to make sure that your merchant account is secure—that is, it won’t be frozen or terminated without warning.

Responsible merchant account providers—even for very small businesses—will look at your payment history, business bank account statements, e-commerce website and customer reviews to make sure you’re a good investment. Once you’re approved, you’ll know that your merchant account provider has your back.

4. Provides 24/7 Customer Service

If you accept payments online, your customers could make purchases at any time of the day or night, which is why it’s essential to look for a credit card processor that offers customer service around the clock.

As a small business, even one missed sale or bad review can have a significant impact on your revenue, which is why it’s critical to work with a merchant account provider that can resolve technical issues and gateway-related credit card processing outages as soon as possible.

5. Accepts a Wide Range of Payment Methods

The primary reason for opening a merchant account is to be able to process credit and debit cards as well as other kinds of electronic payments—i.e. everything besides cash, cheque and payment in kind.

If your customers prefer to pay using alternative payment methods like e-wallets, mobile payments, electronic bank transfers, open invoices, mail orders and telephone orders (MOTO) or buy-now-pay-later payments, your merchant services provider needs to be able to handle these payment types to ensure that you capture every sale.

6. Provides Fraud Protection and Chargeback Mitigation

A major challenge for small business owners who accept credit cards is the threat of fraud. In 2022, e-commerce retailers lost €38 billion to fraud. Chargebacks can also eat into your revenue, with a single chargeback typically costing 2.4 times the original purchase price.

When shopping around for a merchant account provider, look for one that provides comprehensive merchant services including customisable and adjustable fraud protection and chargeback mitigation tools. By marking suspicious transactions rather than blocking them outright (or letting them go through unquestioned), you can capture every legitimate sale and prevent chargebacks by settling any issues directly with the customer.

7. Provides Sales Reports, Data and Analytics

Having accurate financial data at your fingertips is essential if you want to grow your business. When comparing merchant account providers, pay attention to the availability of sales reports and analytics that show you how you’re tracking month over month.

Beyond simply processing payments, the right merchant account provider will work with you to help you increase your online sales. Having clear, easy-to-understand presentations of your sales data will enable you to identify the revenue streams that are performing best to help you make strategic business decisions for the future.

8. Offers Quick Settlements for Merchants

Cash flow is often an issue for small businesses that are just starting out. To make sure you have money in your business bank account when you need it, look for a merchant services provider that can settle transactions quickly and pay out the funds on a schedule that works for you.

Because credit card transactions take a day or two to process, you won’t generally receive the money straight away. However, good merchant account providers can often have the funds in your account the next day—as opposed to several days later—ensuring cash flow when you need it most.

9. Has Transparent Pricing and Personalised Rates

For small businesses, the pricing structure of most traditional merchant accounts can be—at best—off-putting and—at worst—overbearing. Many merchant account providers charge:

  • An application fee
  • A setup fee
  • Monthly fees
  • A merchant statement fee
  • Chargeback fees
  • Refund fees
  • International transaction fees
  • An early termination fee if you switch providers before the term of your contract (usually three years) is up

In addition, you might face the cost of point-of-sale hardware for in-person payments, computer monitors and software purchases right out of the gate. You can see how these costs could quickly eclipse your monthly revenue!

In reality, all you need for credit card processing is a virtual terminal on an internet-connected computer. Some businesses even accept credit card payments on their mobile phones! For the most cost-effective solution for your small business, look for a reputable payment processor that:

  • Doesn’t lock you into a contract with early termination fees
  • Doesn’t charge an application or setup fee
  • Charges low per-transaction fees
  • Has a monthly fee that’s much lower than your monthly revenue, or no monthly fee at all

To make sure you’re getting a deal that will be manageable for you, ask different merchant service providers about their pricing structure and request a complete list of all of their fees. You can then apply these fees to your average monthly sales volume and ticket size to see which provider offers the best deal.

10. Has Multi-Currency Capabilities

Multi-currency payments may not seem like a big deal right now, but if your small business sells digital products, offers software as a service (SaaS) or is thinking about expanding internationally, this feature can be invaluable.

With a multi-currency wallet, you can receive and spend money in Euros, dollars, rupees and Mexican pesos without paying currency conversion fees, resulting in significant savings. You will also be able to capture sales from customers in countries all over the world, maximising your revenue.

11. Scales with You as You Grow

As a small business, the merchant account services that you need right now are probably fairly simple. To accept payments and manage your money, all you need is a secure payment gateway and a dashboard where you can view all of your transactions.

As you grow, however, you might find that your needs become more complex. For example, you might eventually need capabilities like:

  • Recurring billing
  • Loyalty program management
  • A customer database
  • E-mail marketing
  • Multi-currency settlements
  • …and more

Partnering with an end-to-end payment processing company that has these features from the start will allow you to continue your relationship as your business scales. In many cases, partnering with a single all-inclusive provider can end up being more cost-effective than adding each feature separately.

The Right Merchant Account Is an Investment in Your Long-Term Growth

Doing your due diligence to find a reputable, small-business-friendly merchant service provider will take time and effort at the beginning. However, once you’re up and running, you should find that your sales increase, your payment-related headaches decrease and you have more time to focus on your business.

To make sure your needs are met now as well as into the future, look for a merchant account provider that offers the highest tier of PCI compliance, personalised per-transaction fees, low—if any—setup or maintenance fees and financial reports to help you make sound decisions. In time, the partnership should help your business grow!