What do you know about merchant accounts?
We all know that a merchant account is a legal agreement between a merchant – a merchant and a processor. It exists in the form of a dedicated bank account that allows you to accept and process financial transactions made by your customers using debit or credit cards.
You can also use it to pay your bills and any other transaction fees that may arise. However, there are a few more details you will need to understand if you are going to start accepting payments for your business, whether you are working online or offline. So, here’s what you probably didn’t know about merchant accounts, but you should:
Top Five Things You Should Know About Merchant Accounts
1. Merchant account can be set up in many banks: most banks would welcome you with open arms. After all, they make money every time you process a transaction.
They can even help you find the right payment gateway. Be aware that you will need to link this account to your regular account. Because you cannot keep your money there and must transfer it to your business account periodically.
Setting up merchant accounts can take 2-3 days. However, large banks can take up to three weeks, especially if you are starting a new business, so prepare for a longer wait.
2. It is not easy to connect a merchant account: not all types of business are eligible for a merchant account. Having risky products, services, or even a poor overall business history can prevent you from gaining approval.
Bad reputation is the most common reason for rejection. This is why your acquiring bank will guide you through a credit risk assessment. To check if your company is suitable and ready to accept online payments before you receive your merchant account.
New companies still pose a much higher risk than an established company seeking to change suppliers. Therefore, you may face some problems if starting a new business.
In addition, some types of business may be rejected in principle. Taike like online gambling without a proper license, auction sites, duplicate billing products, gym memberships, nutritional supplements, immoral sites, etc.
3. Merchant accounts require a valid agreement (contract): before connecting your merchant account, you will need to agree with your provider on certain issues.
Such as, for example, the term of the contract. Or what happens if you decide to stop working early and register with another merchant account provider? Along with other issues, this should be in a detailed and binding agreement signed by both parties.
4 Merchant account holder accounts do not provide the same level of service: Small business processors do not provide a full merchant account.
You will be able to process credit card transactions, but you may not be able to get certain features like PCI Compliance Services and others.
For small and new businesses, you can survive without a full fledged merchant account. But after your business grows, you need a more stable service provider with full features and security.
5 Merchant accounts are not cheap: merchant accounts may have different fees determined by their provider. These fees can be paid monthly or annually depending on their types, so you need to be prepared.
Some more important information
The most common fees associated with opening a merchant account are account setup fees (application fee). Some merchant account providers will undertake huge amounts of money to set up your account.
Although it is a one-off item, it only takes a few minutes.
Maintaining your account – covers anything that your service provider does not charge you directly.
Authorization fee – charged every time a transaction is made. The fee is valid even if the request was not approved. Discount (treatment) rates: a percentage of each sale based on the type and size of the business. Carried out only for successful transactions.
Payment Card Data Security Standards Compliance (PCI DSS) Pay: A reasonable cost for security standards that protect your business from fraud and your customer data from being compromised.
Monthly Fees – Only charged if you do not meet the monthly payment processing minimum requirements. Usually, you only pay the difference between the actual processing costs and the amount shown as the minimum monthly.
Chargebacks are charged every time your processor has to stop paying and return the amount to the customer. Disruptions that occur may be due to returned orders or technical errors.
Registration fee: A monthly fee for the application that the supplier sends to the seller at the end of each month.
The report shows all business processes during the month and their reported fees. Early termination is an expensive penalty. Only charged if you decide to end your contract earlier than agreed.
Outcome
Having a merchant account is critical for both online and physical stores.
In fact, if you want to run any kind of business and accept debit or credit cards, you first need to open a merchant.
This is why choosing the best merchant account provider is a critical decision. This can seriously affect your business. Be sure to pick the provider with the best overall service, not the one with the lowest interest rates.
The specialists of Eternity Law International will provide you with expert advice on opening a merchant account in a suitable jurisdiction.
If you have any questions or need advice on opening a bank or merchant account, call us at the numbers listed on the website, or write to the form at the bottom of the page.