We are new with next to none biz history and try to open a merchant account. It took us a month tons of hassle of get the following offer:

Merchant account via cardaccept.com 2.2% Master/Visa + .25 per transaction and other monthly fee, the bank is HSBC.

But they are going to hold an extra of 5% of every transaction into a deposit for 6 months, making our start really hard.

We are new and inexperienced. Our question is if this is OK and just about every newbie is going to come across, and if it's worthwhile to spend another month applying for another one.

Thanks for your advice,
-PW

Yes. It's a good offer. Hold Back funds are normal in the business and 2.2% is good. I've worked with Bob Rochleau from Cardaccept.com to open several accounts and I can recommend them and the rates are from the lowest I've seen on the market.

p.s.

We are an registered company in Oregon and have a biz checking account and credit card.

It's a very competitive offer :)

IMHO

Holdbacks are usually not the case unless your business is high risk or your credit history is flawed. Keep checking around some as well.

Welcome to the forums, peacherwu! :)

To fully analyze that merchant account offer that you got, you'd also need to know all other applicable fees. The stuff in the fine print that can really add up.

For instance, whether it is a 2-tier or 3-tier downgrade system, the mid-qualified (if applicable) and non-qualified rates that apply.

Also - the classifications that determine what sales are billed out at the above rate levels is also important to know.

Any AVS, WATTS or other transactional costs. Any monthly minimums, annual fees or cancellation fee terms that likely apply on the account.

Plus, you'll want to find out how chargebacks & retrievals are handled and if any kind of fraud scrubbing technology (beyond AVS/CVV2) are included in the account.

Lastly, keep in mind that most merchant accounts in the U.S. do not require any reserve at all.

The exceptions are accounts that present a high degree of risk based upon factors like monthly volume, average ticket size or max ticket size being very high on an account with no prior history.

I'd agree with Corey - check around and see if you can find an option without a reserve. And definitely check into the above details as they pertain to the merchant account offer that you already have.

Best of luck with your search! :)

Thanks for all your advices, Paulo, Corey and cdgcommerce's elaboration!

The truth is that one of us has pretty bad credit history, that could explain it.

I guess my next question is if Cardaccept.com is reliable and how risky is our 5% deposit?

We have ongoing nightmares with Paypal.

Thanks,
-PW

The 5% is yours. You need to find out if it is a rolling reserve or when you will actually get it back . I have seen some accounts that if there are no problems - the reserve goes away in three months. Once you account is established, and you have a good merchant processing history - ask.

If you are asking usually for under than $30,000 a month, your acceptances is usually on the spot.