Today, the majority of consumers use credit cards and debit cards to pay for their purchases and far fewer people use cash to buy goods and services. Because of these evolving economic practices, businesses that have a merchant account set up can avoid losing out on sales.
A merchant account is a special bank account that a small business can request. The funds that come from credit card payments go into the business’ merchant account, and they stay there until the company spends them.
Merchant accounts come with an assortment of fees, so an interested business owner should study all aspects of such an account. First, the merchant account will most likely have a monthly fee. The provider outlines this steadfast fee in the agreement. A transaction fee is an individual fee for each credit or debit card transaction. Second, ACH (or Automated Clearing House) fees come from the credit card processor. ACH is an electronic network that processes financial transactions in the US. Third, chargeback fees incur if there is a bad transaction. A customer can create a chargeback fee by withdrawing a payment. Customers can initiate chargebacks because of dissatisfaction of the product or other reasons. A business owner should pay close attention to the previously mentioned fees as well as other potential expenses such as hidden fees and setup fees. The goal is to receive the necessary services without bankrupting the business.
A positive reputation and credit score are necessary for a business to obtain a merchant account. Some businesses with lower credit scores may still qualify, but they might be subjected to higher fees. Applying for a merchant account is easy. The interested person can apply online or by visiting a physical location. The provider will want some information about the business such as the monthly sales volume and the nature of the business. Some companies promise that applicants can begin processing credit cards right away. Completing an application for a merchant account is much like signing a contract; the applicant can carefully review the agreement terms and then decide whether to accept them or not.
Most consumers would rather gravitate to establishments that accept all forms of payment than stick with a company that has narrow options. A merchant account allows a business to lift its limitations and please its customers in the process. Happy customers turn into loyal patrons who can then bring in additional customers.