A Simple Merchant Accounts Overview for Small Business Owners

Many small business owners like to keep things as simple as possible. Running a successful company is hard enough no matter what the size, but it seems like the little guys oftentimes have the toughest road ahead of them.

For this reason, many small businesses may be hesitant to the idea of processing credit and debit cards. They figure it will be too much to juggle so they stick to cash.

The problem with this line of thinking is that these businesses are missing out on a wide range of customers who expect to be able to pay with their debit or credit card. The fact is that signing up for a merchant account to process credit cards and provide other services doesn’t make running your business more complicated, it makes it easier and more profitable. Here is a quick rundown of some of the ways a merchant account can benefit your small business.

Credit Card Processing

The ability to accept credit cards isn’t just a handy thing to have at the cash register. Credit card processing can also be extremely useful if you want to expand your business onto the Internet.

The way it works, at least on your end, is simple. Once you have either swiped your customer’s credit card or they have punched it in on your website, the transaction goes through a complex process that is handled by your merchant account provider. Then the money is deposited in your bank account in approximately two to three business days.

These credit card purchases can be processed in two different ways: deferred or real-time processing. With real-time processing the transaction goes right through. This is convenient for Internet businesses where the customer expects to get the product instantly. An example of this would be a band that is selling mp3s right from their website, or a small publishing house selling documents or novels online.

The difference with deferred processing is that the order is sent to you to review and process later. This is useful if you have someone ordering a product through your website and you actually have to physically ship something to them. It gives you a chance to make sure the order is right and you have everything in stock before you charge the people and ship it out.

Deferred processing is also handy if you receive a lot of orders from foreign countries. If the customer’s credit card network is down for some reason the transaction won’t necessarily be cancelled immediately. Deferred processing allows you to just make a simple phone call when the network is back up to allow the transaction.

Debit Card Processing and e-Checks

If you have an actual storefront with a swipe terminal then debit and ATM cards will be processed exactly like a credit card. The only difference is that the funds are taken directly from the customer’s checking account, but it all works the same on your end.

E-Checks are just another way that your customers can purchase items from you on the web. They work just like paper checks except they don’t require the buyer’s signature. All you need to process e-Checks is the name of the bank, the account number, and the routing number.

There are a few different ways you can process these e-Checks. There are software applications available that allow you to print the check out and deposit it in your bank account. The downside is that, like a regular check, you have to wait a few days to make sure it clears.

You can also set up a transaction service to process the checks. It looks to make sure everything is accurate and can also, for a fee, guarantee the check. Then they will reimburse you if it bounces.


With a merchant account you can also set up escrow services. You really only have to worry about this if you are selling very expensive items and your customers want a bit of extra security.

An escrow service is, quite simply, the middleman. The way it works is fairly straightforward. Your customer pays the escrow service for your product. The escrow service then notifies you that the payment has been made so that you can ship the product out. Once your customer has received the merchandise and is happy with it they tell the escrow service, and you get your money.

If the customers aren’t happy they can ship the merchandise back and tell the escrow service that they want their money back. The seller has about a week to inspect the item before approving the refund.

As you can see there is a whole world of possibilities when you sign up for a merchant account. It can help your company at its physical location as well as on the Internet. A merchant account gives your customers more options to pay for your products, which will be sure to help grow your business. Simplify and expand your small business by signing up for a merchant account today.