New Robust Accounting Software Program for Consignment, Resale, Retail and Thrift Shops Inventory Sales

What's Wrong with Merchant Accounts?

A 'merchant account' is a special bank account which receives credit-card proceeds for merchants and forwards them to the merchant's personal or business bank account.

VISA and others basically allow people to use their credit cards to steal from merchants, so only a few banks issue merchant accounts. All others don't want to be involved.

Because there are only a few banks issuing merchant accounts, they've had little competition and unfortunately little government regulation, so they've pretty much done what they've felt like doing to increase their bottom lines.

Obtaining a merchant account is an arduous frustrating process with lots of requirements - financial statements, tax returns, credit checks, long detailed forms, invasion of privacy, $100's in application fees, requests for more and more information... After a few weeks, you may or may not get a merchant account and if you do, you can bet you will not be awarded the low-ball processing rate advertised - no matter how good your credit is, because banks have other excuses to charge more - time in business, sales volume, address, product offered, how offered (online or offline), etc.

Merchant banks are basically dishonest opportunists, employing a variety of unfair practices to exploit merchants.

Publicly promote low fees which they grant to very few applicants

Expect 4-5% of sales for credit-card expenses.

Bury fees on sub-tier documents like 'terms and conditions'
Change policies after agreements are made
Charge outrageous fees like up to $50 for chargebacks¹
Increase a merchant's reserve without consent or notice
Increase processing fees for a variety of reasons

Merchant banks require that a portion of each sale be set aside in a reserve fund to protect the bank from future refunds (chargebacks). The amount may be several thousands of dollars and will be held for several months after the merchant account is closed.

Ideally it's a good idea to avoid dealing with merchant banks if at all possible. There are other alternatives to accepting credit card payments, finally! Just close this window to read about it.

¹If someone buys something from you using a credit card then decides to go directly to their credit-card company to get a refund (instead of asking you for one), that initiates a 'chargeback'. Unless you can refute the reason for the person asking for a refund, you will be forced to refund the purchase price. You will also still pay credit-card processing fees for the sale and for the refund AND you will be charged a 'charge-back fee' of about $50 - even if you agree to refund the buyer's purchase (after the charge back is initiated)!