by Ben Dwyer Changing your payment methods can be exciting, since it often indicates your business is expanding into new markets. But many business owners overlook a major factor: updating your merchant account.
Your merchant account is for a specific business setup. If you’re changing that – for example, going from in-person to online sales or going from a brick-and-mortar restaurant to food truck – you’ll need to update your merchant account as well. If you don’t, you could end up overpaying or worse, having your account closed for violating terms.
Fortunately, it’s relatively easy to stay on the right side of processing. In this article, I’ll go over how adding (or changing) your payment methods affects your credit card processing.
Fees May Change
Right off the bat, let’s talk about costs. When you add or change payment methods, your processing fees will likely be different for the new channel. Whether they go up or down depends on what method you’re adding or changing.
As a rough rule of thumb, if you’re adding online payment processing, it will be more expensive than in-person payment processing. Online payments are typically “riskier” than in-person transactions and are accordingly higher cost. Conversely, if you’re opening up a retail location to complement your existing online storefront, you’ll likely see lower costs for the in-person location.
In either case, it’s worth making sure you have competitive pricing and a transparent pricing model. Speaking of…
You May Want a New Pricing Model
The pricing model you use for one type of payment acceptance might not be the best option for another. For example, a flat-rate pricing option for an online channel might be cost effective for card-not-present transactions but pricey for card-present transactions.
Not sure what model is right for you? Check out Credit Card Processing Pricing Models for more information.
You’ll (Probably) Need Equipment
There are some situations where you might be able to use the same equipment. For example, if you use a mobile POS solution like a tablet at your retail store, you could theoretically use that same machine if you changed to accepting payments on-the-go at tradeshows. But in general, you should expect to need new equipment. For example, a retailer with a brick-and-mortar store going to an online storefront will need a payment gateway to accept payments online. An online retailer opening its first brick-and-mortar location will need a POS system or credit card machine.
Be sure to check out CardFellow’s credit card equipment directory to get details and reviews of credit card processing equipment.
PCI Compliance Requirements May Change
Since all businesses are required to be PCI compliant, you may think that changing payment methods won’t have any effect. However, changing payment methods will likely change the scope of your PCI compliance requirements because PCI requirements are method-specific. For example, a brick-and-mortar store may not be required to comply with certain online security protocols that a business accepting cards through their website must comply with. You may need to complete a different self-assessment questionnaire or implement additional security tools.
If you’re not PCI compliant, you will also typically face PCI non-compliance fees. You can avoid that by working with your processor to achieve and maintain PCI compliance and being upfront about any changes to your payment acceptance methods.
Can I just keep the same processing account?
If you opened a merchant account specifically for a payment method that you’re now changing, no, you should not just attempt to keep the same processing account. The reason is that you entered into the merchant agreement for that specific business profile and un-communicated changes to it can be a violation of your contract. Processors monitor your account activity for patterns that align with your original application, including the transaction size and acceptance method. It’s likely that your processor will realize that you’re using the account for transactions not originally discussed or approved. At that point, they will either freeze or close your account.
Some business owners simply attempt to keep the same processing and think that because their processor doesn’t notice right away, it’s fine. Your processor will catch on at some point and you’ll likely lose your ability to accept cards with little or no warning. Save yourself the hassle and do everything above board. Contact your processor before you start accepting cards through a new channel to ensure a seamless experience.
Do I have to use the same processor for a new payment channel?
Nope. It often makes things easier to use the same processor if they support the channels you want to use, but it’s not required. You could have a merchant account for your brick-and-mortar store with one processor and another merchant account for your online storefront.
However, in those cases, you’ll usually miss out on the benefits of consolidated reporting across channels so if that matters to you, it’s worth considering using one processor. Additionally, the higher volume from the two channels together can sometimes lead to better pricing, even though the different methods may incur different costs.
Steps for Adding or Changing a Payment Channel
If you’re ready to add or change a payment channel, follow these steps:
- Contact your processor and discuss the new channel needed
- Evaluate the pricing they can offer
- Determine what new equipment (if any) you need
- Ask your processor about any changes you’ll need to make for PCI compliance
- Get any new terms and pricing in writing
There are a number of reasons you may need to add (or change) a payment method to your business. It’s relatively straightforward to do so, but you’ll need to make sure to work with your processor and not just continue to use your existing merchant account with no changes.
Need help finding the right processor for your business? Try CardFellow’s free credit card processor comparison marketplace!
