How to Set Up a Merchant Account
A merchant account is a bank account that facilitates payment using debit cards and credit cards. A merchant account can be viewed as a contract between a retailer, a payment process and the merchant bank for the settlement of debit and credit card payments. Payment made by a customer using the debit card or the card for a product or service is deposited to the merchant account. The money is then transferred to the business bank account. The wiring of the cash to the bank account may be done each day or each week. There are internet merchant accounts for businesses which transact online. For firms whose operation are done online and offline, they need to have the normal and internet merchant accounts.
Even though the application has to be scrutinized, getting a merchant account is not hard. Customers have the freedom to compare different packages as offered by different banks. They will have to assess the risk nature of the business. The returns made by a business are used in risk assessment of the business. The length of the time a bee has been in service is given a check. Firms established over many years are viewed as less risky and more stable.
The history of the business in terms of bankruptcies and defaults are put at focus. Firms with poor record are at a disadvantage. A risky profile does not automatically disqualify a merchant from getting an account. The vendors prefer to charge high set up cost and higher transaction fees to caution themselves against these risks. However, after the business starts to use the merchant account well, terms can be renegotiated, and the rates lowered. The vendor will also be interested in knowing whether the retailer had a merchant account previously. If one had such an account; they will dig deep to know how the customer used the account. Customers who have no history with merchant accounts do not have problems when setting up a new merchant account.
The processor will also have an interest in the credit history of the business owner. A person with bad credit will find it difficult to get a merchant account.
Transaction charges for internet merchant account are usually high than for the offline merchant account. This is due to the riskier nature of online merchant accounts. There has been integration of the merchant account with the mobile phone on the near recent. To use this facility; there is an app that needs to be downloaded to the phone. Once the application has been installed, the merchant can start using the phone to accept credit award payment. This allows one to move out of the bound of the brick and mortar establishments.
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