A merchant account is a bank account opened by businesses, which accepts payments from customers who pay using credit cards and debit cards. The merchant bank is the acquiring bank which pays the merchant. The merchant may have a bank account in the same bank as the customer or a in a different bank. There is an agreement between the bank and the business that the bank will honor the credit/debit card payments. There are third parties who process the payments and in such a case they also become part of the agreement. Most people today make payments using credit cards. There are many credit card processing companies which have emerged with the onset of ecommerce. They charge different fees and the customers will need to choose the most reliable and cost-effective card processor.
A merchant account can be opened for individuals, companies, corporations and government agencies anywhere in the world. The internet has made the world flat which means there are no trade and communication barriers. Most providers offer low-cost merchant accounts with some waiving application and set-up fees, offering them free of charge. The system allows merchants to operate real-time transactions fast which are made secure by in-built fraud prevention software.
There are many advantages of a merchant account. Business sales increase to high levels when you start accepting credit cards. This happens immediately because many customers can buy what you are offering and pay using their credit cards even when they are at home, in the office, travelling or on vacation. When a need arises the need is met immediately by offering the credit card for payment. Many businesses accept major credit cards. When you display a merchant account acceptance on your website, you attract more customers.
The customers will buy more of what you are offering, place extra orders and buy from you more often. Your business will attract impulse buyers increasing sales even more. These increased sales will bring in more profit for your business and more cash flow. A merchant account reduces the paperwork. The money is deposited in the merchant account within the shortest time making it available for the business quickly because you will not need to wait for checks to be cleared. The cash flow helps you to purchase more and increase business products and services. Payments for expenses and bills are paid making the business more efficient.
When a customer purchases goods and services the credit card details are encrypted to prevent unauthorized readers from accessing the information. Credit card numbers have to be prevented from fraud. The details are electronically sent to the bank for authorization. If there are enough funds to pay for the transaction the payment is authorized and paid to the merchant account. When opening a merchant account, it is important to look around and browse the different websites to see what is required and also compare the rates. An online application form is provided which can be downloaded and filled and then sent.