How Do I Choose the Best Merchant Bank?

K.C. Bruning

Some of the most important things to consider when choosing a merchant bank include fees, customer service, and contract length. It is also wise to learn about the bank’s history and reputation. Overall, it is wise to get the full picture of what the bank requires and has to offer so the business owner will not be overly influenced by individual factors such as a low per transaction fee or loyalty to a bank used for personal transactions.

Some merchant banks charge a fee to provide hard copies of monthly statements.
Some merchant banks charge a fee to provide hard copies of monthly statements.

There are several different kinds of fees to consider when choosing a merchant bank. Some of the most common include per transaction, discount, and statement fees. The per transaction fee is a set amount applied to each sale, while the discount is a percentage of the sale that the bank will retain. It can be helpful to consider both of these elements together when picking a bank, because sometimes a low transaction fee will be offset by a high discount rate and vice versa. The statement fee is a flat charge for printing the bank statement each month.

While it is desirable to find reasonable discount and per transaction rates, if they are too low, it could indicate that the bank is falling short in other areas. Rates must be high enough for the bank to not only stay healthy financially, but also to have the resources to provide good customer service. One way to determine reasonable rates is to become educated on the range of fees in the market so that a median rate for both per transaction and discount fees can be determined.

Reputation is another factor to consider when picking a merchant bank. When researching this aspect of a bank, it is advisable to gather information about experiences with merchant accounts specifically, in addition to learning about the overall quality of the bank. This is an important process because it not only provides information about the customer experience, but it can give a business owner an idea of how reliable the bank will be.

The terms of the contract are another thing to research when choosing a merchant bank. Things to determine include contract length, minimum monthly sales requirements, and cancellation fees, if any. A short-term contract will give the business owner the benefit of giving the bank a test run without a big commitment, while a long-term contract will usually offer lower rates. Many banks will be open to negotiating rates for long-term contracts.

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