Seasonal Merchant Accounts

A seasonal merchant account is exactly as it sounds, a merchant account that is only active for a portion of a year.

Businesses like firework stands, fruit stands, and seasonal tourist businesses can benefit greatly from setting up a seasonal merchant account. Seasonal merchant accounts are not available through all processors. Currently, Nova is the only processor that can setup a ‘true’ seasonal account, but FDMS and others can be setup similar to a seasonal account.

The benefit of having a seasonal merchant account is that there is no need to re-apply for a new merchant account every year, but you still don’t pay for having an account when your business is inactive. Your account is ready for you when you need it and all you need to do is fax in a re-opening letter. Many businesses do not realize that they may encounter difficulties when trying to open a new merchant account each year. The application process does not always go smoothly for every business, and even return businesses are prone to an occasional problem. Since return businesses don’t always take this into account when setting up each year, it is common for loosing customers when a problem does occur, because insufficient time was allowed to get setup. Another reason is that every time you apply for a merchant account, your credit gets checked. Having a company check your credit can lower a credit score, and if there were some credit problems during the year, it could prevent the merchant account from being opened completely, or force you to get setup with more expensive lower quality services. A seasonal account will prevent this entirely. Unfortunately, past processing history, doesn’t entitle you to the same service in the future.

True Seasonal Merchant Account
A ‘true’ seasonal merchant account is setup to be only active for a certain pre-specified portion of the year, or portions of a year. During the time that the account is open, it acts like a standard merchant account, but when the account is seasonally shut down, the merchant has no fees or charges. To ensure the merchant is completely ready to be started up or shut down, the merchant must send in a closing or re-opening letter.

As Close As Possible
For a merchant account that acts like a seasonal account, a business can negotiate no monthly minimum and a low statement fee. Fees cannot always be completely waived, but the monthly minimum can usually be waived leaving only the statement fee. This will leave more reasonable fees during months with little or no activity, but you always have the option of processing whenever you need it. This is a better option for businesses who may still need to run a transaction during a month that they weren’t planning to.

When is a seasonal merchant account unwise?
If your business has only a few months of inactivity it is a waste of time to get a seasonal merchant account. Its not worth the extra time or money to open and close an account for only a few months of the year.

Important Notes for Seasonal Merchants:

1. Make sure you fax in and verify over the phone when you are planning to open or close your account seasonally. Do these 2 weeks in advance.
2. Your account must be open for at least 1 month every 6 months. This means 2 months per year, with less than a 6 month gap between openings.
3. If you are planning to close for only 1 month: DON’T. Its not worth the time, effort, or money, and your account may not get closed and re-opened in the time you want it to.
4. If your business processes for even 1 day of any month, the account is considered open for the entire month.
5. If your account is closed and you need to run a transaction, you cannot, until you send in a re-opening letter. Assume a 2 week wait once your re-opening letter is sent before your account is opened.