Who should apply for a Merchant Account and Why
A Merchant Account is simply an account that is created so a business or an individual can accept credit cards, debit cards, or other forms of electronic payment. It is also widely known as payment processing and facilitates the transfer of funds directly from the sales you make to your bank account.
Today, it is highly unlikely that you would be able to do any kind or good amount of business without accepting either credit or debit cards for payment. This is especially so as technology continues to rapidly improve and security measures are taken more intensively and strictly. It results in more and more people seeking convenience in payment methods and no better way than getting a merchant account.
As any business that has an online presence and relies on online marketing avenues and traffic to its website for profit, merchant accounts should be a given.
Before you decide to partner with any given financial institution or provider, you need to understand the components that entirely make up the merchant accounting mechanism. It is also important to note that most banks or institutions are reluctant to give merchant accounts because of the different make-up they possess.
First and for most, it is difficult to assess the authenticity of the transaction as signatures are not made and this significantly increases the chances of fraud occurrence. Fraud protection should therefore be at the top most of your priorities when identifying the financial institution you wish to subscribe to as well as the type of merchant account you wish to use for your website or online presence.
There are usually multiple components involved when credit card payments are made on your site.
Three phases or layers are crossed;
1. Payment gateway – this provides you with the ability to accept the billing information form the prospective client and facilitates validation steps that all try to ensure the transaction is a legitimate one. The order is transmitted to and from the internet merchant account provider.
2. Internet merchant account – this is the account that the financial institution or bank holds and facilitates the transfer, at a given fee which is deducted from the transfer conducted. The payment gateway transmits all the billing information to the internet merchant account from where the information is adequately processed.
3. Your website – the efficiency and how effect the process is will almost always surely depend on the features and usability of your website. This also covers how the billing features, gateway and the merchant account itself are merged or integrated.
It cannot be said enough that selecting the right merchant account for your business is vital for its survival and profitability. Proceed with caution but if done rightly, merchant accounts are a huge step to success.