Merchant Accounts
Merchant Accounts
What Is A Merchant Account?
If you have a business which is running quite successfully and you are ready to take it to greater heights you can further improve its success by accepting credit card transactions. But for that you need to have a merchant account. Simply put, a merchant account is a kind of bank account which helps businesses consolidate their payments through the acceptance of credit cards, debit cards, electronic checks and other forms of payment methods. Such a process of acceptance is also known as payment processing or merchant card processing. Thus, a merchant account offer business houses the capability to accept credit card and debit cards for purchases made from them. What happens here is that your merchant account provider permits the credit card transfer from your consumers and puts the cash for their purchases made from you directly into your business checking account. All the process does not take more than two working days. Business houses or merchants need to apply for a merchant account through a bank or merchant service provider for obtaining credit card payment for their goods and services. What is not apparent at once is that like any other bank service, a merchant account has to be evaluated and underwritten depending on different factors. As such, after evaluating factors like types of products sold, marketing methods, standard business practices, credit positions of both the business and business owners, an underwriter will judge whether to underwrite or not. Businesses and product types such as Internet Gambling, Adult Entertainment etc. which are very high risk find it hard to get approval for a merchant account. Accordingly, a merchant account operates like a line of credit to the businessmen for a period. Thus, for the merchant account processing services, a business owner needs to have approval on factors including personal guarantor's credit score, business type (goods or services sold), card acceptance method, business longevity, return/refund policies etc. There are also processing rates & fees comprising mainly of transaction or authorization fee and discount rates. Though most common fees are charged on a per-item basis, there are also fees which are charged on a monthly, quarterly or yearly basis. Typically, two basic methods are used to market merchant accounts by banks or providers. One is the direct marketing by banks performing the processing or the other is through a certified agent for the bank. Such an agent can as well register with both Visa and MasterCard and other major credit cards as an ISO (Independent Selling Organization/MSP (Member Service Providor). A merchant, in the form of processing capability systems, needs processing equipment or software to acquire card information, generate authorization requests and secure sales. Such equipment based on business needs comprise terminals: - wireless, contactless, stand-alone; PC software: stand-alone or integrated into other business systems; internet gateway solutions: virtual terminal or eCommerce versions. Nowadays, it is becoming important for businesses to have merchant account as fewer and fewer customers carry cash. By accepting credit card payments, a business house can keep customers happy and thereby increase their sales and revenue. |
