If you want to accept credit cards but you can't get a merchant account, then a free merchant account is for you. What do you need to know about free merchant accounts? Here are the basics. First off, a merchant account is an account with a bank that allows you to accept credit card payments. This means you can tell your customers to pay either in cash or use that little plastic card in their wallets. There are two kinds of merchant accounts for the two different kinds of transactions: Card present transactions Card present transactions means at the point of sale(POS), the credit card can be swiped on a physical terminal. Think Borders bookstore along El Paseo. Card not present transactions Card not present transactions means a credit card cannot be physically seen as well as swiped. Mail Order/Telephone(MOTO) merchants & Internet merchants fall under this category. There is no physical storefront or POS. Applicants of a free merchant account usually fall under Card not present transactions. A free merchant account is obtained through a third party processor. The third party processor allows other merchants to share their own merchant account. Merchants who avail of a free merchant account are usually rejected first by banks or brokers, or are either start up businesses who don't have enough money to get their own merchant account yet. Requirements of a free merchant account Applications can be quick, or drag on for days depending on your responsiveness to the requirements (& how quick your agent can arrange for a merchant account). Here are some items needed to apply for a free merchant account. Accomplished Merchant Application & Agreement A business checking account Articles of Incorporation or Incorporation Documents Valid Identification Papers ( e.g. Passport, Drivers License) Business License Voided Checks Bank Letter with Beneficiary Name Web site URL Statement of your return policy Fees of a free merchant account Like banks & brokers, free merchant account providers charge merchant fees. Discount rate (around 2-4% of transactions) Transaction fees Monthly processing fees Other fees you might incur include one time application fee, AVS(address verification service fee), statement fees, return fees, reserve fees, & charge back fees. Before you sign up, keep these things in mind
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