Merchant Account: A Must Have for Your Online Business
As the world evolves from traditional to digital business systems, card payment processing has become a critical part of any growth-focused e-commerce brand. Your online business must be powered to accept card payments, whether online or in person. But technically, it is impossible to accept such online payments without the right systems in place. And this is where merchant accounts and services come in handy. With a merchant service, you can complete all forms of payments initiated electronically.
But what is a merchant account, and how does it work? Here is all that you need to know.
What is a Merchant Account?
Merchant accounts are specialized accounts designed to accept and process multiple types of payments. Basically, the customers’ money is transferred into this type of bank account after initiating payments via such modes as credit and debit cards. Modern merchant services have extended this payment processing to cryptocurrencies like Bitcoin and Ethereum. Notably, merchant acquiring banks partner with business owners to communicate all transactions initiated electronically.
Essentially, an online business does not have direct access to its merchant account. Instead, once payments processed to your merchant account are verified, the funds are transferred to your registered business bank account.
Types of Merchant Accounts
There are several options for processing electronic payments for your online business. Here is an overview of the major merchant account categories.
As the name suggests, an aggregator account accumulates from different business users in a single master account. The aggregator merchant acts as an admin account owner, while businesses pooled in this account operate as sub-merchants. When customers process payments to your sub-merchant account, the necessary fees are deducted by the aggregator. The aggregator merchant then transfers the funds to your bank account.
High-risk merchant accounts are issued to businesses considered to have great exposure to risks, such as chargebacks and fraud. Ideally, high-risk merchant accounts attract higher processing fees as compensation for the risk the merchant service provider takes on such businesses.
This type of account is ideal for large business ventures with huge transaction volumes. ISO merchants act as intermediaries between member businesses and the acquiring banks.
This is probably the most commonly adopted account type used by e-commerce businesses in what is sometimes known as the point-of-sale system.
Who Needs a Merchant Account?
Regardless of the nature, size, and operations of your business, having a merchant account is paramount to the success of any online enterprise. As business owners, running an online business without a merchant service means you cannot accept the various forms of online payments, such as credit cards, debit cards, and bitcoin. On the other hand, certain circumstances dictate that having a dealer account is an unnecessary cost. For instance, freelancers that work using one mode of payment, other than electronic cards, may not require any type of dealer account.
You need a dealer account if you are looking for;
- Flexible modes of payment
- PCI compliance
- Additional payment security measures
- Safe payment processing for transaction volumes of over $5,000.
- E-commerce reputation
Benefits of Having a Merchant Account
It is crucial to offer your customers a wide range of payment options to keep up with the dynamics of e-commerce. However, is it really worth acquiring a dealer account? What are the benefits of having one? This outline describes the various reasons why you should have a dealer account.
Accepts Credit Cards
The most obvious benefit of a merchant service is that business owners can accept credit cards as a mode of payment. Credit and debit cards are rapidly gaining traction globally, and accepting card online payments is definite leverage for any online business. Additionally, expanding your payment acceptance portfolio is an added feature to improve customer experience.
It has been proven that customers tend to spend more when given options such as credit cards as a mode of payment. Almost every adult consumer owns a credit card or debit card, considering cashless online payments as their go-to option. Integrating card payment to your business through a merchant account directly translates to more purchases and higher sales.
Helps with Money Management
In addition to allowing more fund transfer options for your business, a merchant account supports multiple payment features, including online transfers and mobile POS. As a result, online ventures can adopt one payment method for the various channels of revenue. You also enjoy the benefit of streamlined cash flow management. Instead of counting cash or referring to wide-ranging payment channels to keep track of your finances, a dealer account organizes every cash under one system.
Improves Customer Experience
The impression that online users have about your business is critical to your brand image. You want customers to log out of your website or mobile app satisfied that you care about their feelings. Integrating multiple payment channels into your business allows customers to transact in whichever means they find convenient. Such convenience increases return customers, sales, and overall revenue.
The bottom line is that if your business is to accept multiple payment options, then you must have a merchant account as the gateway. By signing up for a merchant service, you improve your sales, enhance customer experience, and get better in money management. And whether you go for the aggregator account or the ordinary e-commerce merchant service, what matters is that both you and your customers are at a convenience.