To accept credit cards, you’ll want to open a merchant account with a bank, choose a payment processor and choose a point-of-sale system. If you then connect your business checking account to your merchant account, money will transfer automatically, usually within one to three days of the transaction.

M&T Bank can make it easy with a turnkey solution for getting set up to accept credit and debit cards, as well as mobile wallet payments. We’ll guide you through each step, including choosing the hardware and software for the right point-of-sale system for your business. Our Merchant Services Business Consultants can manage your card processing for you. And we can provide you with resources to protect your business and customers by being Payment Card Industry (PCI) compliant.

To access the lowest processing fees, merchants must settle a credit card sale within 24 hours of the transaction. Most businesses submit their card transactions at the close of business in a batch that includes all of that day’s sales. A timely turnaround avoids customer confusion and facilitates better cash flow for the business.

The credit card payment process includes three stages: authorization, settlement and funding. Authorization happens in a matter of seconds when a payment processor confirms that the cardholder has an appropriate balance to cover the payment. The merchant then sends a batch of authorized transactions to their payment processor to be settled. The processor then collects the money from the credit card issuer. And finally, the funds are deposited into the business’s merchant account.

The merchant generally pays fees between 1.5% and 3.5% of the credit card transaction for processing services. But if a business fails to submit their authorized transactions for settlement within 24 hours, they are more likely to pay higher processing fees.

Your Merchant Identification Number (MID) is unique to your business and informs the credit card payment processing systems where to deposit your funds. MIDs are issued as part of the process of establishing a merchant account with a bank.

The card payment process includes three stages: authorization, settlement and funding. As transaction information is passed throughout the credit card network, your MID identifies you initially as the party requesting payment and then as the account to be funded. It’s like your digital address and is key to getting you paid.

Connecting a business checking account to a merchant account provides a robust, customizable option that’s preferable to a payment service provider for most established companies. Merchant account advantages include assistance with PCI compliance, fraud protection, higher limits on transaction size and analytics tools to help you make decisions.

Merchant fees are what businesses pay their bank for the services and equipment that allow the business to accept credit card payments. Merchant fees vary by bank and are dependent on the volume and types of credit card transactions the business is doing. These fees are charged separately and in addition to the 1.5% to 3.5% small businesses can expect to pay the credit card companies in processing fees.

Banks commonly charge a monthly service fee for the operation of a merchant account. Your business might also be charged a per-transaction rate that may vary for the different types of cards you accept. And depending on your point-of-sale system, you may pay additional costs for equipment and software. Penalties are generally owed for any transaction irregularities like chargebacks, refunds and PCI non-compliance.

A dedicated M&T Merchant Services Business Consultant will work with you to understand your company’s unique electronic payment needs. Our account services include a range of payment acceptance options to fit with your emerging business.

Some businesses account for merchant fees as cost of goods sold while others record them as an expense. Either method is acceptable. An accountant can give you the best advice for your situation.

Your merchant account fees are directly tied to your credit card transactions and are usually charged as a percentage of sales. Each transaction has a cost. So, it’s logical to account for merchant fees as cost of goods sold, meaning that your gross profit would be determined by subtracting your cost of a product, including the merchant fees, from what you were paid when you sold the product.

Conversely, some businesses lump merchant account fees in with other recurring operating expenses like utilities or rent. This accounting method can work as well. Just remember that your merchant fees may vary month to month much more than your other expenses.

The total cost your small business will pay for a merchant account will depend on your business’s credit card transaction volume and the bank where you establish the account. Factors like your business’s credit history may also play a role. There is no standard overall amount a business can expect to pay.

Some banks may charge a one-time setup fee to establish a merchant account, while other banks waive this fee. Then, depending on the pricing structure of your merchant account services, you’ll pay a per-transaction percentage of your credit card sales volume plus a fee that’s either charged per-transaction or monthly. You might also be charged a PCI compliance fee, regulatory fee and system access fee. All these amounts can vary considerably.

An M&T Merchant Services Business Consultant can customize a plan for you with competitive pricing and a range of payment acceptance options to fit your business needs.

MCC stands for Merchant Category Code, a four-digit number system that credit card issuers use to classify different types of businesses. Using the MCC, card issuers can track cardholder spending, assign points or benefits and enhance fraud protection.

Your business’s MCC classification could impact your credit card processing fees, with riskier types of businesses paying higher fees. Some MCCs are universal with all credit card companies while others are specific to that issuer.

MCCs are fully transparent to both businesses and consumers. Every credit card statement will include an MCC for each transaction. To understand the fee implications of your business’s MCC classification or to learn more about establishing a merchant account to accept credit cards, visit with an M&T Merchant Services Business Consultant.

Using a payment service provider (PSP), such as PayPal, Square or Stripe, without establishing a merchant account with a bank is a one-size-fits-all approach to accepting payments. Connecting a business checking account to a merchant account provides a more robust, customizable option that’s preferable for most established companies. Merchant account advantages include assistance with PCI compliance, fraud protection, higher limits on transaction size and analytics tools to help you make decisions.

An M&T Merchant Services Business Consultant will work with you to understand your company’s unique electronic payment needs. We can tailor merchant account solutions to your specific way of doing business.