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A merchant account allows businesses to receive funds from their customers in various ways, including electronic payment card transactions. It serves as the intermediary between the customer’s and business’s bank accounts and lets companies receive money immediately instead of waiting for the buyer to pay their card bills.
To open a merchant account, you must prove that you operate a legitimate business. So the first step is getting a valid business license. Once a payment processor has set up your account, you may start conducting debit and credit card transactions.
How To Open a Merchant Account
Opening a merchant account is easy. Here are the steps for setting up an account with a credit card payment processor:
1. Evaluate Your Needs
Think about what your business needs before anything else. This will focus your search and let you partner with a payment processor that offers the services suited to your requirements.
You’ll need to consider which credit cards you want to accept. Will you accept Visa and Mastercard only, or will you also allow American Express? You should also decide how you want to accept payments. Do you need an in-person solution for your physical store or a solution that supports online payments?
2. Gather the Needed Paperwork
The prospective processor will provide you with all the necessary documentation to open your account. Most processors ask for your business information, including your organization’s name, length of time in business, contact information, financial statements and tax identification number.
3. Apply for a Merchant Account
Your merchant account application becomes official once you’ve submitted your paperwork.
4. Wait While Your Application Is Reviewed
The processor will check your personal and business credit history to determine if you have past credit issues and asses your risk level. Businesses are considered lower-risk if they handle in-person card transactions. On the other hand, companies that process cards online are deemed riskier since virtual transactions are more susceptible to fraud. Apart from risk level, other factors are taken into consideration depending on the processor’s standards.
After assessing your personal and business background, the payment processor will decide whether to approve your application. High-risk companies might still get approved but with higher fees.
The review process can take between 1-7 business days. Once your application is approved, you can accept card payments right away.
How Do Merchant Accounts Work?
When you have a merchant account, you are given access to credit and debit card terminals that route your buyers’ card data to your processor’s network for approval and processing. Then, the merchant account deducts the purchase amount from the buyer’s account if the transaction is cleared. This includes the transaction fee, usually three to five percent of the total. Finally, the funds are deposited into your business’s account. The deposits occur in batches, usually at the end of the day, rather than every after transaction.
In cases of a customer dispute, the merchant account verifies the transaction information to either warrant or deny it. When the dispute is approved, the processor will withdraw the funds from your account and deposit them back to the customer.
Benefits of a Merchant Account
Many consumers increasingly use credit and debit cards for in-store and online purchases. This means a merchant account is no longer just a nice-to-have feature – it’s necessary if your business wants to cater to modern buyers.
Setting up an account might seem confusing and overwhelming to the untrained eye. You would need to provide numerous paperwork and subject yourself to an extensive financial evaluation. But with a suitable payment processor, you’ll be streamlining the entire process and enjoying invaluable benefits.
More and more consumers carry some form of credit or debit card instead of cash. According to statistics, the average non-cash transaction is $112, while the average cash transaction is $22. Therefore, the ability to accept card payments will aid in increasing your profits, directly impacting your business’s bottom line.
Enhance Customer Convenience
The consumers of today enjoy flexibility when shopping. When you provide your buyers with various payment options, including credit cards, cash, checks, gift cards, etc., you give them complete control over how they spend their money. Numerous payment options allow for a seamless shopping experience and total customer satisfaction.
Receive Online Payments
People increasingly rely on the internet for shopping, bill payments and account management. For this reason, your business should adopt and give buyers the option to pay online. A dependable payment processing service allows you to provide invoicing, set up recurring billing and receive debit, credit and eCheck payments online.
Organize Money Management
Moving your payments online and working with a payment processor streamlines the way your business does transactions. For example, you don’t have to count cash when you own a merchant account. Instead, every payment is recorded and cataloged, helping you stay organized and allowing for better cash flow management.
Businesses that don’t offer card or online payments in the digital age might be perceived as out of touch or outdated. However, you demonstrate your business’s trustworthiness when you provide numerous payment options through a merchant account. This is important since customers are more likely to transact with a company with a degree of legitimacy.
Why Do Business with Merchant Services
MerchantService.com is a payment processor specializing in merchant profitability by treating our partners as part of the family. Since our foundation in 1995, our goal has always been to build a company committed to integrity and excellence in service. We started in the Pacific Northwest and have grown across the nation throughout the years. MerchantService.com currently has offices in Florida, New York, Montana, Minnesota, Washington State, South Dakota and Hawaii.
Our card processing services improve efficiency, accelerate cash flow, reduce expenses and increase total sales. We offer all these at the lowest possible rates! So join our growing family and call us today at 888-288-3816, or you can fill out our online form to learn more about payment processing solutions.