Bank accounts are an indispensable part of any business. However, finding the right business account is not as easy as having a private checking account. Theoretically, you can do business through your checking account. But because often business transactions violate the terms and conditions of private accounts. For instance, if only private payment transactions are allowed to your account, accepting payment from your customers will be difficult. The right account for your business can be found when you know what kind of payment you are dealing with and how you decide to use it. The most popular account among small businesses is Merchant Account. If you want to accept online credit card payments, you will need a merchant account provider that delivers merchant accounts to businesses. You can also use the services of an aggregator like MyPaymentSavvy, Paypal, etc. which is a company that processes transactions through its own merchant account on behalf of other companies.
It is also important to note that a merchant account is a legal agreement between you and the provider. As such you need to know a few important things before signing a merchant account agreement. POS Systems, unlike online merchant account,(as described above) will offer you a variety of fully integrated advanced systems, apart from the credit card processing you will also get a printer, inventory tracking, managing employees and costumes reporting and many more features. enter to read pos systems reviews in comparisun.com and find the right one for you.
What is a Merchant Account?
A merchant bank account is a special bank account that allows companies to accept payment through debit and credit cards. It is essentially the middleman who lets businesses accept credit and debit cards, both in-person and online. A merchant account, usually provided by banks and other financial institutions, processes electronic payments by transferring funds between a customer and merchant banks. During a sale, the merchant account works behind the scenes to withdraw money from the customer’s bank and deposit it directly on the merchant’s checking account. The process works the other way around during a refund. You can get a merchant account for high-risk businesses or normal product or service business.
Here’s a simple explanation of how a merchant account works, what to look for in a merchant account, and why small businesses should opt for a merchant account.
How does a Merchant Account work?
When a credit card transaction is processed, information must be sent to a payment gateway or the bank to see if the cardholder has sufficient funds. In conventional transactions, this is usually part of the POS machine, which reads the cardholder’s data and checks with the credit card company as to whether the transaction can be executed. As soon as it confirms that the cardholder has sufficient money, it authorizes and completes the transaction. The money is then forwarded to your merchant account for use.
In the case of an e-commerce transaction, this service is realized online via a payment gateway. The payment gateway receives transaction requests which are sent by the software of the website and then connects to the card company (Visa or Mastercard) to verify if there is sufficient fund in the card. If the customer has enough money, the transaction is authorized and the cardholder’s funds are transferred to the merchant account.
Why Merchant Account for your business?
Just because you are a small company does not mean that your business doesn’t need a card processing function. It all depends on your type of business, how and where you intend to perform it, and how much streamlining you need to make it a lot easier. For example, if you’re a mobile business, you spend a lot of time at trade shows or otherwise the flexibility to accept credit card payments everywhere, a mobile credit card processor is the best choice for you. If you have an eCommerce store, consider a common POS system that integrates credit card transactions with your accounting and CRM software to automatically consolidate offline and online sales data.
With the increasing use of the internet to perform transactions, the use of debit cards and credit cards are growing. Merchant account facilitates your business by accepting both debit and credit cards for payment. It helps you eliminate the friction in buying or payment processes for your customers. Businesses that value the comfort of their customers grow faster. Various researches have shown that customers are willing to spend more if they can pay through the card.
With a merchant account, the chances that your business will flourish becomes higher since it directly affects your sale and overall growth of your business. It also makes your business hassle free. The traditional method of payment (through cash) was time-consuming and difficult to manage. With electronic payments, it is easier to manage the cash flow in the business. It also lets you accept different kinds of payment through different payment services for your customers who might have to on a repeat basis. The flexibility that merchant account provides to your customers will make them happy. They will enjoy the experience with your business since they can shop the way they want and when they want – with ease.
Merchant accounts are specialized for businesses. They provide the comfort of all services under one roof. It lets you avoid all the paperwork that you might have to do otherwise to receive an international payment. It is economical since there are no hidden fees. There is no setup, integration, monthly or other hidden fees. You only pay for the service. Hence, it should be the ideal choice for your business.