Michigan State University Extension
Home-Based Business - 09159413
10/01/98
Some home businesses encounter difficulty finding a bank to give them a credit card merchant account if they have not been in business at least a few years. One of the most likely ways to get a merchant account immediately is to work through a bank agent or independent sales organization (ISO). An ISO is a company that acts as an intermediary between small businesses and banks. You will pay more using an ISO because these companies derive income from fees and surcharges added to what you would normally pay if you were able to deal directly with a bank.
Fees vary so it pays to comparison shop. Read the contract carefully for hidden charges and requirements. You may be required to use a check-verification service provided by the ISO for an additional charge.
Warning: The salesperson for ISOs may be so eager to sign you up that they'll fill out your application inaccurately, such as sections regarding whether the salesperson has personally inspected your premises and the percentage of your sales derived from mail and telephone orders. If a falsehood is detected later by the bank, your merchant account may be terminated and your name placed on a terminated-merchant list that bars you from getting another merchant account in the future. Be sure to check the completed application for accuracy.
The other problem is that some ISOs are not legitimate. What you may find are high application fees and long-term lease arrangements for terminals that are difficult to get out of.
Another way to get a merchant account is through membership in business organizations or trade associations specifically related to your industry. Many of these provide access to Visa and MasterCard accounts as a member service. To find trade associations in your field, use Gale's Encyclopedia of Associations. This directory can be found in your local library.
Arts and Crafts Business Solutions now offers a bankcard service specifically for and tailored to the needs of the arts and crafts marketplace. For more information, call (800) 873-1192.
Use the following as resources on merchant status:
Merchant Status Report, $6 from Rick Kemer, The Kemer Group, 3231 Porks St., Easton, PA 18942, (800) 972-6664, fax (610) 559-8553.
How and Where to Get a Master Card/Visa Merchant Account for Your Home-Based Business. $19.95 ppd. from Work Trading Co., 9595 E. Vista, Hillsboro, MO 63050, (800)274-0970, fax (314) 995-1329.
Strategies for Getting Charge Card Merchant Status at Your Bank, $27.95 ppd.from John Cali, Great Western Publishing Co., 21244 Millwood Square, Sterling, VA 20165-7607, (703) 404-0093.
Source: "Where to Go When the Banks Say No", Home Office Computing, February 1993 and Barbara Brabec's Self- Employment Survival Letter, Sept./Oct. 1994.