What is a merchant account?
To accept cash payments and checks, every retailer must have a bank account. But it’s not possible to use a regular business bank account to accept and process electronic transactions. To do this, a business opens a merchant account to which online payments will be accepted. Thus, a merchant account is a type of business bank account intended to accept electronic payments from customers. Whether you’re starting a business or already own one but want to adapt it to the current customer needs, you’ll definitely need merchant account services.
When an online transaction is processed, the funds are transferred to a merchant account first, and then within a specified period, the money is sent to the merchant’s business bank account. Typically, a merchant account is opened in partnership with an acquiring bank, which plays a direct role in processing electronic transactions. Having a merchant account is the key to global markets and sales.
Merchant account types
Retail merchant account is a great option for landline store owners that accept credit card payments. Opening a merchant account of this type usually requires lower setup fees.
E-commerce merchant account is required for stores that sell their products through internet platforms and accept online payment methods. This merchant account type will come with higher transaction fees.
How to open a merchant account?
Although partnering with an acquiring bank is a reliable way to open a merchant account, the registration process entails many hassles that not all businesses are willing to put up with. It’s difficult to predict whether your online merchant account application will be approved and how long the acquirer will consider the request. Banks usually prefer not to cooperate with high-risk businesses or startups to avoid possible problems or chargebacks. Therefore, opening a high risk merchant account can be more problematic. Plus, acquirers charge various fees for providing payment processing services, such as setup fees, monthly fees, transaction fees, and others. Therefore, before cooperating with an acquiring bank, we recommend that you evaluate all the fees and make sure these costs are bearable.
Obtaining a merchant account with a PSP is much easier than with an acquiring bank. Of course, the payment service provider will also analyse your business, but primarily to offer you favourable merchant account services that suit you. Besides hardware and software for processing card payments, you can also benefit from additional services provided by PSPs, such as multicurrency, risk management, analytics, and others.
How to choose a merchant account provider?
There are many merchant account providers on the market, but not all of them are reliable and have favorable terms of cooperation. But considering several factors when choosing a merchant account processing solution, you are most likely to find the best merchant account for e-commerce business:
Payment security should be the priority for every merchant who wants to have a good reputation with their customers. Therefore, when choosing a merchant account provider, pay attention to the security measures they take to protect your customers' payment information. The main of them are:
- Additional verification
- PCI DSS (Payment Card Industry Data Security Standard) compliance.
Without these security measures, your customers' card data can be stolen and used by fraudsters.
Obviously, opening and maintaining a merchant account will come with costs. To avoid being caught off guard, check out all the merchant account fees that certain PSP charges for their services. These can be monthly fees, per-transaction fees, setup fees, and others.
Sudden problems with transaction processing on your e-commerce site can damage your reputation. Even if it happens to you, it's essential to eliminate all glitches as soon as possible. Luckily, many merchant account providers offer prompt customer support and are ready to help their clients with any issue.
Now that you know more about merchant accounts, you're ready to start accepting online payments from customers all over the world and increase your income. However, your business success is determined by the reliability of the payment platform you partner with. At Corefy, we provide merchants with a comprehensive payment solution that allows them to connect to any payment service provider with a few clicks and accept multiple payment methods. See how it works.
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