Merchant Accounts

In the article I’ll tell you about Merchant Accounts. Shopping today has become more a matter of convenience and choice than paying an actual visit to the store. With technology becoming more and more advanced, this is a world where today’s invention is outdated tomorrow. This spells out a lot of choice for a customer. Thanks to the internet, people sitting in any corner of the world can make a purchase on the internet and have it delivered to their door.

Merchant Accounts

This also means that a book released today, can be in your hands the same week. Of course, such ease in shopping today cannot be attributed to only the internet. The world of finance has lent a very big helping hand too- they popularized the use of credit and debit cards. They made purchasing possible by a mere swipe. Not only does it mean that people don’t have to carry loads of cash on them anymore, but it also means that they are likely to spend more.

What really happens when you swipe you card and how does your account automatically get debited per purchase made? That is where ‘merchant accounts’ come into the picture.

A merchant account works like a bank account, with a merchant bank playing the role of a host, giving the permission to conduct business online through credit card transactions. Once a customer pays for something, it is this merchant bank which will then carry the funds into the bank account of the particular business. In other words, the role of a merchant account is more of an intermediary.

So why is opening a merchant account important? For a variety of reasons, opening such an account does not take up a lot of investment or time. They are a must for conducting business online. The two factors looked at for opening an account is the type of business and also the credit history. Since taking money from the customer is this easy, it also means that lesser time is spent on tracking down payments. Hiring of new employees can also be minimalised to a large extent.

There are different kind of credit card processors which can be bought. There are those that run on a line and which are kept in the stores, or there are processors which could also be used at conferences, or one day shows etc which are wireless. Most merchant banks also replace the instrument if its gets spoiled. However it is also important to ensure that a reputable merchant bank is signed up with, so that frauds and other scams can be avoided.

Merchant accounts have a lot of advantages for businesses too. Firstly, they are an important aspect of any start up operation, as they help in streamlining payments. They also have the necessary tools to conduct online payments against frauds and other illegal activities in a very safe manner so that customers are not exploited and also so that payments reach on time. Customer service tools, automated payments are a few options that are given. There is also the flexibility factor which is offered, as businesses can choose those credit cards that will work in their machines. That itself helps in keeping frauds low.

Then of course, there is the undeniable factor of convenience which is the basic plus point of such an account. Taking money from the customer has never been easier and neither has transferring money at such a fast pace. Moreover, the ease with which a processor can be set up is also important. There is minimal fuss, and less space which is taken up. Lastly, it should be remembered that a merchant account can be fully customized to suit a customer’s requirement. No add ones will be given unless they are necessary.

There are two ways to set up an online merchant account. The first way works well for websites that offer the facility of making purchases over the net. It involves using an online payment service which works just like a merchant bank for a retail store. The payment service is the intermediary, the only downside being that customers too would need to have an account with the same payment service to be able to make their purchases on the net.

A certain transaction fee per transaction may be charged if such a payment service is looked at. The second option is to go through a proper merchant account banking service, most of which are also available online. This is another method that is used at quite favorably by people with their own websites, more so because of the ease of design.

Although having a merchant account is considered important to a business, there is very often a downside to the same too. The expenses which one may incur can be quite heavy, as most often they are hidden, and usually come up a month or so after using the service.

A transaction fee is a small cut or percentage of the purchase, which is made every time a credit card is used to process a sale. Processing a transaction itself may involve what is called as a batch fee. Sometimes, there is a minimum number of transactions which need to be processed on a monthly basis, or else, the business would have to pay a certain fee. Likewise, hiring the services of a customer service team from the provider end might also prove expensive.

Some providers also charge what is called as an annual fee for using their services, and this is especially true for those providers who give the equipment too. Canceling the service before the contract is due, would also mean that a small fee would have to be paid for the same. Moreover, if you decide that you want to work with the same provider again for some reason, there might be another fee levied on you.

A lot of modern shops try to conduct business with the cheapest merchant banks so that expenses are kept at a minimum. However, being cheap does not always mean that the service is safe. If customer data is exploited in any way, it is always the retail store or website which comes under the hammer. It makes sense at the end of the day to pay that little extra something, so that customers keep coming back to you.

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