So, you’ve come to the realization that your business needs payment processing. Without it, you’re unable to process debit and credit cards, which obviously significantly limits sales. In fact, you risk losing potentially loyal customers simply because they do not have the convenience and speed they’ve come accustomed to at checkout.
But where do you start? If you’re ready for your small business to accept debit and credit cards, then you first need to understand what a merchant account is, how they work and where to find the right provider for your business.
What is a Merchant Account?
A merchant account is a special type of account that gives your small business access to funds it receives from credit and debit card payments. Rather than having to deal solely in cash, it provides your business with a way to store and collect cashless payments in-person and online. This account is established by a contract between your business and a merchant acquiring bank.
How Does a Merchant Account Work?
The next question you might have is, how does the merchant account process work? Typically, the process begins with a credit card network, like Visa or MasterCard. Your customer chooses a product or service to purchase and, within just a few minutes, their card processor relays their transaction to their card network.
Once that information is received, it is then bounced over to the designated issuing bank where the transaction is approved and the funds are permitted to be deposited into a merchant account. The merchant’s credit card processor then ensures the funds are made available in the business bank account from the merchant account. At this point, the merchant can finally collect and use their funds (this typically takes just a few days).
Why Businesses Today Need a Merchant Account
Customers today have a lot of expectations when it comes to the checkout process. There are so many ways to pay from credit and debit cards to Venmo and Zelle to Paypal and Afterpay. Endless options ensure customers find a convenient way to take the last step and make their purchase. They also expect speed. If a transaction takes too long to process, it could lead to cart abandonment and turning to your competitors.
Offering your customers options and an effortless way to make their payment ultimately means more sales. Not to mention, a more loyal customer base. A merchant account can ensure you have the ability to provide a variety of options and create a seamless payment processing experience that keeps your customers coming back for more.
Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of best merchant services providers. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.