- August 13, 2018
- Posted by: ipaytotal
- Category: High Risk Merchant Accounts
Nowadays, a very significant amount of retail business transactions take place online. That is why setting up an online payment system that receives debit or credit card payments for your business that is user-friendly and secure is imperative. More and more people ditch the old ways of paying cash or checks and starting to be more comfortable with paying online whether it be for international or even local purchases because of its convenience.
Many businesses providing local services have now included the option of paying them online so that their clients can choose the best payment option for them or whichever is the most convenient.
Generally, owners of construction and general contractor businesses have lots of things to worry about in running their businesses. One thing that they should prioritize is how they will receive payments from their clients. Opening a merchant account for them to be able to receive and accept credit card or debit card payments can help their businesses a lot.
Here are the reasons why.
1. Ease and immediacy of accepting deposits and payments – Accepting card payments can help them improve their cash flow since they can take the payments or even deposits made to them immediately. They can use these funds to start off new projects. They no longer have to wait for a few days for the deposits to be cleared and credited to their account and make sure it doesn’t bounce before they can start their work.
For longer contracts – depending on the scope of work to be done and if the client will permit it, recurring payments may be scheduled or installment option can be provided which are automatically charged to your client’s card.
2. Conveniences for customers – Most often than not, clients don’t carry enough cash to cover a large expense but have their credit cards always on hand. It is way easier for the clients to click a link on the electronic invoices that have been provided to them or go through a website than dropping off an envelope with cash or mailing a check because they can make their payments remotely without having to leave their premises. These can also help the clients who fall short on funds who need to have the work done now and could not wait until they have the money in the bank.
3. Increases customers’ confidence in your business – This can help address the problems of those people who have apprehensions in making cash payments. Some clients are more comfortable in paying by credit card. And since this form of payment is very common nowadays it may seem odd if a business doesn’t accept it and may cause the customers to feel unease. Clients are often told that credit card payments are the safest way of paying contractors and are often recommended because it provides consumer protection because of the paper trail involve.
4. This protects the business with dealing with fraudulent customers – Checks can be issued without funds and the only way for the merchant to find out if the check they have received as payment has the appropriate amount of funding is after it is cleared by the bank which normally takes for a few days. However, credit card payments require proper identification for the payment transaction to proceed and make it hard for clients to cheat.
Some merchants have concerns that hold them back in accepting card payments but all these concerns or potential issues when properly addressed beforehand are not problems at all.
1. Accepting online payments cuts revenue because it adds cost.
Although additional cost is true because credit card processing company collects an average of 2 to 4 percent fee for each transaction. And it looks expensive when accumulated to hundreds or even thousands of dollars. However, it is possible to charge this fee to the customers by including this in the margins. Some businesses offer discounts for cash transactions.
2. It’s risky because of the possible chargeback.
A merchant can proactively take steps to discourage chargeback by documenting the transaction with supporting documents and doing the necessary quality assurance checks with the clients and also having them to sign off a paper that the work is finished and have met their approval.
The following steps can help the merchant should the merchant decide to accept credit card payments and offer this payment option to clients.
1. Get a merchant account – Find a merchant account provider for this type of business. This business category falls under high-risk merchant accounts.
There are two types of payments processors.
a. ISO/MSPs account providers that help owners to get merchant accounts. This fits for construction companies that generate over $3,000 of card sales per month.
b. Merchant aggregator or payment facilitators that manage several businesses under their large merchant account. This is for companies that earn less than $3,000 per month. This offers flat rates and has zero monthly or annual fees. This is riskier because the amount of payment received varies per company and may be considered as irregular transactions from the credit card issuer side and may possibly trigger a fraud alert and have the merchant account frozen. Once the merchant account of the merchant aggregator is frozen it follows that the whole merchant account for the businesses under it froze as well.
2. List down as accurate as possible the company’s transaction amount and volume – These information such as the average ticket or invoice size and the total amount that the company process per month are needed to determine the costs linked in the merchant services. It also helps the service provider to inform here should there be an irregular large transaction that you are expecting ahead of time.
3. Consider getting monthly contract service from processing partners – For a merchant to be able to test the serviceability of the processing partner for the construction business, lengthy contracts should be avoided so that the merchant can easily shift to another should he find a more compatible one. Usually, a payment processing agreement lasts for 3 years term and have high cancellation of contract fees.
4. Go for interchange-plus pricing model – It is recommended by experts for retailers to use this pricing model than the regularly offered tired pricing model which is commonly known as the qualified rate which only benefits the processor at a merchant‘s expense. Some requirements may be needed to be met before one can get approved with interchange-plus pricing models such as a set monthly transaction cap that should be met to qualify.
5. Get a processor that uses Level 2 and 3 processing – more information is needed on this transaction level. Thus giving you more security that the transactions are legit.
Once these are done, other things should also be noted to be able to successfully provide online payments option to clients.
- Generating electronic invoices that have secure payment links where clients can pay.
- Make sure that the invoices sent containing the payment link has the company’s logo and is very similar to the actual company invoice to increase the customer’s trust and security when clicking the link.
- Make sure to be able to enable auto-pay or recurring payments so that paying is less work for the customer and the merchant is paid right on time.
Receiving payments and getting paid for your work done should be the easy part of the job and opening your business to accept credit card payments can reduce the time spent in chasing down cash or waiting for checks. Online payments cut down late payments and the check is in the mail excuse. It’s worth the time to consider offering this payment option to customers which can be advantageous to the business.
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To apply for Merchant account for Construction & General Contractors just fill out our short form and we’ll get back to you and help you save time and save money. IPAYTOTAL is here not only to provide you a merchant account but also to assist you and help you anytime (24/7). Whether you are planning to start a new business or need a help to expand an existing business, we can help you. Our highly experienced and well-educated team, with more than a decade of experience in the industry, will always ready to help in giving you payment solutions to start your new business with safe and secure policies and also to expand you an existing business.