Merchant Accounts: An Option for Every Type of Business
Each business has its own set of unique needs. Whether your business
is a chain of grocery stores or a Mom-and-Pop gas station, an online
financial services corporation or a local plumbing service, you can find
a suitable merchant account for your needs.
Setting up a
merchant account has many benefits for today’s business owner. It allows
a business to offer more payment options to its customers, thereby
encouraging those customers to shop more freely. It helps a business
receive its funds more easily than it might if that business has to deal
with each credit card company on an individual basis.
benefit is that a business can limit its susceptibility to financial
loss by allowing it to offer its customers an alternative to paying with
checks that might be returned weeks later for insufficient funds.
Through a merchant account, the business can know immediately if the
customer’s credit or debit card has a balance that can cover the
purchase. That isn’t usually possible with check payments. Finally,
customers may be more willing to make impulse purchases because they can
pay for them with a credit card, whereas they may not have cash on hand
or in the bank to purchase an item or services with a check.
course there are fees involved in using a merchant account. These can
vary depending on what type of merchant account is used. They can
depend, too, on how large the business is, how many transactions occur,
and the size of those transactions. Like anything else in the business
world, however, these fees are usually negotiable.
business owners who are interested in setting up a merchant account,
there are several types available from which to choose. The type of
business will generally determine the type of merchant account.
Retail Merchant Account
the name indicates, the retail merchant account is used mainly by
retail businesses: dress shops, hardware stores, and other businesses
that sell to the public from physical addresses that their customers can
visit. Fees for this type of merchant account are generally lower than
for other types because they are more secure. Credit or debit cards
must usually be presented at the time of purchase and are swiped through
a card reader, or the credit/debit card number is keyed into a cash
terminal. The business owner or sales associate has the ability to
request identification from the customer.
Mail or Telephone Order Account
type of merchant account is often referred to as a MOTO account. The
customer must provide his or her credit or debit card number via mail or
telephone, and an associate at the business will enter that information
into a computer that is connected to the merchant bank or payment
processor. Fees charged for this type of account are usually higher than
those charged for a retail merchant account, as the business does not
have an opportunity to perform the transaction face-to-face with the
customer. There is also no opportunity to request identification from
the customer. On the other hand, the service or merchandise is not
usually handed over to the customer right away in this type of business.
Therefore, if the credit or debit card proves not to be valid or if it
does not have a high enough limit for the purchase, the business will
not usually lose anything.
Internet Merchant Account
type of merchant account is used by online businesses to gather and
process credit card information at the time that services or merchandise
is ordered by the customer. Customers fill out their own orders online
and provide their credit or debit card information in an online form.
The information is transmitted directly to the merchant bank or payment
processor and the card information is verified or rejected. Transaction
fees for this type of merchant account are usually higher, too, for the
same reasons that the MOTO fees are higher. But, also as with the MOTO
account, the business is less open to losing anything in the event that
the customer’s card is eventually declined.
Contacting a merchant
account provider can get a business started in setting up a merchant
account. Funds will flow faster and more efficiently to the business,
and more customers will be able to take advantage of the business’s
goods or services. With few drawbacks—if any—a business and its
customers will quickly begin to enjoy a mutually beneficial relationship
through the use of a merchant account.