Who Can Process Charges?

Janet Attard answers a question about merchant accounts.

Dear Janet,

I am curious if there are companies out there that take credit card information for you. I have been selling some monitors over the Internet and think I could do more sales if I accept credit cards. I don’t want to go out and get incorporated because I’m not making a fortune.

–GB

Dear GB,

Being able to accept credit cards is likely to increase your sales. Buyers like using credit cards both because they can pay for an item later, and because using a credit card when buying merchandise over the Internet or by mail order, gives them some level of security. If a purchase is never received, or is unsatisfactory and the merchant won’t make good on the sale, the buyer can dispute the charge through the credit card company.

Technically, no one can process your credit card orders for you. It is against the rules of the merchant card companies to do so. That said, there are companies who work around the rules by becoming a reseller of your products. Thus, they take orders for your products and bill the customers for the order under their name. Once they have an order, they send the order to you to be filled.

Although this may sound like an ideal arrangement, it isn’t. Among the problems: such companies charge much higher fees than you would pay if you would have to pay if you had a merchant account and processed the credit cards yourself. Additionally, being billed by someone other than you may confuse your customers.

Don’t let concern over incorporating stop you for applying for a merchant account. You can get a merchant account without incorporating. If you haven’t done so, you will need to register your business, though. Merchant card companies need a bank to transfer money to, and you can’t open the bank account in most areas without registering the business and getting a DBA certificate (a certificate that identifies you as the business owner.)