Restaurant Merchant Accounts - What You Need To Know

Have you ever tried eating at a restaurant that doesn’t offer credit card payment? Did you know beforehand that they only accepted cash? Well, I have and it was really inconvenient since I don’t usually bring money with me and the cashier told me that they do not accept debit cards.

I keep thinking why restaurants would not choose to allow several payment options when almost all businesses already have credit card payment facilities. And then I found out that in order to collect through credit cards, business establishments would need to have merchant accounts.

Now the question is: how do you get restaurant merchant accounts? First, we need to understand that there are three major forms of merchant accounts – retail merchant accounts, mail order telephone order merchant accounts and Internet merchant accounts. Retail merchant accounts offer the lowest transaction rates but often come with the most stringent rules. Transactions need to have the card present, which basically means that the card needs to be swiped through a card terminal such as what most shops, restaurants and hotels have. Merchants who do not have direct access with their customers are not suited for this kind of merchant account.

Mail order/Telephone order accounts usually have the highest transaction rates since credit cards are not physically used and there is greater risk of default in payment. In this case, merchants enter customer’s data into a computer and they process payment through the payment service provider’s website.

Internet merchant accounts are similar to MOTO accounts, in that they do not physically use the credit card and since transactions can only be done through the Internet uses a payment service gateway, kind of a virtual terminal where payment can be processed. This is most common with e-commerce.

Anyway, getting a merchant account is not difficult but without proper research, you can get overcharged. With processing fees involved, sometimes some shops need incorporate costs to their pricing. The higher these fees are, the higher the prices will be. This is why it is important for businesses to choose the proper merchant account that fits their business so as to save in transaction fees.

Before you start looking for a merchant account provider, there are several things you will need to know

• You need to understand credit card discount rates mean and what rates your provider offers. Aside from these, you need to know the different factors that will allow you to get higher discount rates.
• Know the differences in the discount rates of “keyed in” credit cards from those, which are swiped.
• Know how much the transaction rates are. As we have discussed already, some merchant accounts have higher transaction fees so you need to know how much the difference will be so you can also estimate your pricing scheme.
• Know how much the setup costs are. These are the initial fees you have to pay to cover MasterCard, Visa and other credit cards. Some merchant account providers also have charges for credit card machines so be sure to ask about that too.