The acceptance and processing of electronic payment card transactions is enabled through the use of a merchant account, which is a form of commercial bank account. Merchant accounts necessitate a partnership between a business and a merchant acquiring bank, which is responsible for facilitating all communications associated with an electronic payment transaction.
Relationships with merchant account providers are critical for internet businesses. Due to the additional fees associated with these account connections, some brick and mortar firms may elect to forego these charges by taking solely cash deposits into their conventional business bank account. Merchant accounts are a form of commercial bank account that allows you to accept payments online.
How Merchant Accounts Work
For the majority of retailers, merchant accounts are a critical component of their overall business operations. When selecting a merchant account service provider, merchants have a number of choices to consider, with transaction charges being a critical consideration in the selection. Merchant accounts are offered by merchant acquiring banks, who work in partnership with merchants to allow the acceptance of electronic payments through their websites.
If a brick and mortar business chose not to take electronic payments and instead only accepts cash, they would not be required to open a merchant account and could instead rely on a simple deposit account at any bank to meet their needs. Due to the fact that electronic payments are the only method of payment available to clients when making purchases online, online businesses must create merchant account partnerships as part of their company operations in order to operate.
Obtaining a Merchant Account
Even though the industry of granting merchant accounts is extremely competitive, the process of applying for and receiving a merchant account is not without its challenges. Vendors employ a range of factors to assess whether or not to approve a merchant account application in order to reduce risk. These criteria include:
Based on the nature of the firm, is it at a greater or lesser risk of credit card fraud or returns? The amount of time spent in business history, including bankruptcies, defaults, and so on.
If the applicant has previously held merchant accounts, this information is required. The business owner's personal credit history is important. The majority of new company owners are more likely to receive a favorable assessment of their merchant account application from the same bank that currently holds their business and/or personal accounts than from another bank (s).
The presence of a higher risk does not always imply that an application will be denied in its entirety. As a result of the risk, the vendor may initially charge higher transaction or other costs to make up for lost revenue. Eventually, if the company grows and becomes well-established, the fees can be reduced or eliminated.
Which businesses need a merchant account?
An account with a merchant service provider is required in order to accept credit card transactions. The ability to set up a dedicated merchant account, which means that the account is particularly underwritten for your company, is available from several payment processors. Because of the approval procedure, it takes longer to apply for and set up these accounts than other types of accounts.
A specialized merchant account, on the other hand, is not your only alternative. A payment service provider, which allows you to take credit card payments through an aggregated merchant account, is another option you may consider. It is often significantly easier to set up a new account in this manner.
When should you use a dedicated merchant account?
You demand individualized customer service, competitive pricing, and scalability in your business. Because a dedicated merchant account entails a lengthy application procedure, the supplier will be more familiar with your company as a result of the experience. It is frequently simpler to negotiate costs or obtain assistance as a result of this.
You have a large monthly sales volume or a high number of transactions to complete each month. Numerous merchant account providers provide lower transaction fees based on the number of sales made and the number of transactions processed.
You are in a high-risk industry where you do business. Because many payment service providers do not cooperate with high-risk merchants, owning a separate merchant account may be the only alternative accessible in businesses with a higher risk of fraud and chargebacks, such as telemarketing or infomercial sales.
Merchant Accounts with Connected.co
With a large network of high-risk banks both domestically and internationally, Connected.co is constantly expanding its client base and increasing its revenue stream. We have extensive experience in the placement of merchant accounts. We will take use of these ties and our expertise to secure a merchant account for your company in situations where others have failed. Simply put, if your company is lawful, we can help you become authorised! High-risk merchants can also apply for a merchant account with Connected.co, which makes the process simple. We offer a state-of-the-art computerised application procedure that makes applying for a position a simple and painless process.
JW Epply has been a senior executive for over 10 years, during which time he has met and exceeded growth and revenue goals in exceedingly difficult verticals. Epply is recognized as an efficient, dynamic leader with a strong background in sales and sales process, management, and organizational strategy. He holds a Bachelor’s Degree in Organizational Management from the University of Wyoming, and is an accredited Certified Payments Professional (CPP) from the Electronic Transactions Association (ETA).