Why You Need a Credit Card Processing Merchant Account for Small Business

A merchant account is a sort of banking account that stores all the debit and credit card payments a business receives.

In essence, it is a deal between a business owner, a merchant bank, and a payment processing company to enable the completion of debit and credit card transactions.

When a shopper makes a payment, the finances enter the retailer’s merchant account and later go into their business bank account. This bank account transfer can be on a per-day or per-week basis, depending on the agreement.

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Opening a Merchant Account

Acquiring a merchant account is not a walk in the park. Many merchant applications flow in, and banks underwriting processors can be unforgiving.

For banks and payment processors, thorough scrutiny and clearly defined acceptance criteria help minimize risks, and determine who qualifies:

  • Nature of business-is prone to, or at low risk of credit card returns and fraud?
  • How much time in business
  • History of Business – defaults, bankruptcies, etc.
  • Any previously owned merchant accounts
  • Retailer’s personal credit status

Applying for a merchant account with the bank that holds your personal and business banking account can increase your approval chances.

A high-risk nature, however, does not mean that requests will be turned down. Nevertheless, the service provider may charge a higher transaction fee or add extra charges to cover the risks.

Businesses consider high-risk are entitled to high risk merchant accounts. Not all payment services and banks want to work with companies from these sectors, so your best bet lies with high-risk service providers.

The retailer can hammer out a better fee later once their merchant account is well established,

Merchant Account Fees

Opening and running a merchant account comes with multiple fees. Some of these fees are hidden in contracts, so businesses must double-check deals for any loopholes.

The fees include;

  • Setup fees
  • Account opening fees
  • Per-month fees
  • Discount rate
  • Per-transaction fees
  • Overseas charges
  • Card terminal rental fees

Extra charges can inflate the total fee per card transaction to way over 3 percent. Businesses are advised to search and compare fees when applying for a merchant account.

An early contract termination fee applies to businesses that end their merchant account contracts prematurely on top of these charges.

Final Words

Both eCommerce and brick & mortar retailers can rely on merchant account solutions to begin accepting customer payments.

Searching in the right place can increase the merchant account experience and reduce related expenses.

Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands how to compare credit card processing. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.

Real-Time Payments: Why Businesses and Banks Are Jumping On Board

 

high risk merchant accounts

Especially over the last few months, businesses and consumers alike have grown wary of using cash and checks due to the coronavirus pandemic. This has led to a growing number of business owners to turn to real-time payments (RTP). In fact, the majority of businesses that haven’t already implemented this solution have it in their plans to do so.

The Clearing House launched real-time payments over two years ago, which enabled financial institutions in the U.S. to send and receive payments instantaneously, 24/7, year-round. However, due largely to the pandemic, the benefits are just now resonating. The pandemic has created national emergency situations in the U.S. since March. Businesses and households have struggled to pivot and adapt amid all the uncertainty. For business owners, it has exposed the downsides of relying on paper payments and the need to modernize.

A recently released report found that a slim 9% of corporate executives had no plans to incorporate real-time networks. The overwhelming 91% left had a definite interest. This is a considerable leap from the beginning of this year (and before COVID-19 swept the globe).

In a PYMNTS report that analyzed 500 financial executives before the pandemic, just 66.7% of executives were either “very” or “extremely” aware of real-time payments, while 71.9% were “very” or “extremely” interested in the system. Meanwhile, 85.3% were either in the process of implementing RTP or had plans to do so over the next few years. Clearly, the pandemic has pushed RTP to the top of the priority list, based on the latest report.

Why Businesses Are Adopting Real-Time Payments

Here are the top reasons why banks and businesses are – and should – embrace real-time payments:

The Customer Experience

Banks and businesses are quickly realizing they need to adapt their current business models to address the changing demands of customers and the industry. More than ever, there is a need to provide the highest value and enhance the customer experience. Real-time payment capabilities can significantly improve the experience of refunds and disbursements, for example.

Competitive Edge

Adopting real-time payments allows businesses to remain competitive through upgrading their systems, processes, and technologies. Of course, improving services goes hand-in-hand with building relationships with customers. By providing processing that involves more transparency, lower fees, and quicker turn-around times, you will exceed client expectations and gain an edge over competitors.

How to Implement RTP for Your Business

As the needs and demands of customers continue to shift during COVID-19, you might feel that it’s time your business jumped on board. For many industries, it can be difficult (especially right now, as providers shy away from risk) to secure this merchant service. Some business types are categorized as high risk and are turned away.

If this is the case for you, the key is to find a provider that offers high risk merchant accounts. An industry-leading high-risk specialist like EMerchantBroker can help you easily apply online and set up real-time payments in as little as 24 hours. Offering real-time payments can help you boost revenue during tough times, gain a competitive edge and provide the options your customers expect today.