Processing Credit Cards With A Merchant Account
Transacting business with credit cards benefits both the consumer and merchants. For consumers, it is so much more convenient to carry a single credit card as opposed to large amounts of cash. Paying with credit cards makes it so much easier to buy products online too. For merchants, accepting payment by credit and debit cards makes recordkeeping much easier and improves their cash flow. It also makes their businesses much more competitive.
In order to successfully process credit card payments, a merchant needs three things and we will take a look at them below.
A Merchant Account
A merchant account authorizes the merchant to accept credit card payments from individuals and have the money accredited to the merchant's bank account.
A Business Banking Account
A business banking account is needed to deposit the money made from sales and to withdraw any fees and chargebacks.
A Terminal or Gateway
If the merchant account is going to be used offline, then a terminal is required. A terminal is the small machine that swipes credit cards to process the transaction. In some instances, merchants are allowed to key in telephone and mail orders also. If the business is online, then a gateway is required. This is like a cyber terminal; it is the interface between the credit card information entered by the customer and the merchant account.
The risks associated with processing credit cards online are higher than when accepting credit cards at a physical location. Therefore the fees many be higher for these types of transactions. It is also usually easier to qualify for a merchant account for an offline business. If you are planning to conduct business online, you definitely need to find a merchant account provider that is online business friendly. There are a few companies who specialize in just this type of commerce and they understand the unique needs of online business and their credit card transactions.
Processing credit cards with a merchant account also entails a fee which varies according to the type of transaction and monthly volume. Usually a set monthly fee is charged, but waived if sales reach a certain level for the month. There are also small per transaction fees for each sale made.
Processing credit cards, whether offline or online, probably means that sooner or later the business will have to face chargebacks. Chargebacks occur when the credit card owner disputes the charge on his bill and can happen for a number of reasons. The customer may have forgotten about the order, his credit card may have been stolen, he never received the order, or maybe he just wanted to get his money back for whatever reason. Chargebacks and any associated fees will come directly out of the merchant account holders bank account.
All things considered, processing credit cards will be a great advantage for any business, no matter if it is an online store or if it is offline. Having a merchant account will increase both sales and cashflow.
