Merchant accounts facilitate the acceptance of both debit and credit cards as payment options for completed transactions. For a business to acquire a merchant account it must first make arrangements with their preferred credit card processor, it’s this arrangement that allows a business to accept payments directly from a customers’ credit card. The role played by a credit card processor is crucial to the success of any business that seeks a merchant account. This is because it’s the credit card processor who handles the automation process that is responsible for capturing a customer’s credit card information and eventually transferring funds to a merchant account upon completion of sales.
There are basically two types of merchant accounts; a card-present merchant account and an online merchant account. A card-present merchant account requires both the card holder and the credit card to be physically present at the time of the transaction. Usually in such transactions the credit card is swiped through a card terminal. The online merchant account requires neither the card holder nor the card to be physically present while making the transaction. This merchant account is best suited for e-commerce businesses.
Merchant accounts are divided into low risk merchant account, high risk merchant account and Prohibited merchants. High risk merchant accounts are associated with businesses that provide services and sell products that are associated with increased fraud risk. The risk factor is brought about by the possibilities of increased charge back, prolonged delivery periods and geographical location of buyers. Businesses associated with high risk merchant accounts commonly provide services or sell products such as digital media, file sharing, digital downloads and e-books.
The internet presents huge possibilities to businesses today. Competition between businesses has resulted into the scramble to attract more traffic onto a business’s website. What the internet presents to a business is the fact that anybody who has an internet connection and a computer can become a client or a customer. The importance of incorporating an online merchant account is to fully benefit from the opportunity of trading virtually with any person around the world, from the comfort of your business premises.
For any business seeking to establish a merchant account, the best and probably the first place to begin their search should be with their present bankers. This is because the bank already knows some of the basic information that is required when making a merchant account application. There are also brokerage firms such as eMerchantBroker that could assist your business in acquiring a merchant account.
Caution should be taken to protect the business and its customers from fraudulent purchases. Businesses can mitigate against fraudulent transactions by installing a secure payment getaway. With ecommerce transactions involving products or services such as digital media, file sharing, digital downloads and e-books, a secure payment gateway is responsible for receiving all transaction requests and liaising with the credit card processor and bank, to see whether the card holder has sufficient funds to complete the transaction. If the cardholder has sufficient funds, what follows is the authorization of the transaction and eventual transfer of funds from a card holder’s account into the business’ merchant account.
A merchant account provider earns money from charging a percentage or a flat based fee for the use of a credit card. Some of the common costs and fees associated with operating a merchant account are transaction fees, internet discount fees, Statement fees and Chargeback Fees.
In order to maximize profits and check expenses in this era of swipe and go payment solutions, businesses are encouraged to partner with firms like eMerchantBroker to enjoy the competitive advantage of being matched with one of the many banks and processors within the brokerage firm’s network.