The Advantages of Merchant Accounts for Small Businesses!

Merchant accounts enable small businesses to accept various forms of cashless payments online. They allow you to make payments with eChecks, debit, and credit cards, which have become the standard for online transactions worldwide.

According to the Digital Economy Payments Report, 37% of customers use credit cards, 33% use debit cards, and 22% use eChecks for online transactions, especially for larger purchases. Customers’ diverse payment preferences are one of the many reasons to use a merchant account. In addition to offering flexibility, a merchant account protects against fraud, improves cash flow, and enhances the credibility of all small businesses.

Table of Contents: —

• What is a Merchant Account?
• Is it necessary to have a merchant account for your business?
• Key Advantages of Merchant Accounts for Small Businesses
• How to set up a merchant account?
  • Final Thought: —

What is a Merchant Account? 

A merchant account is a business account that enables organizations to accept and process electronic payment card transactions or other forms of electronic payment. It works as the middleman between the card swipe (or online transaction) and the deposit of funds into the business account. 

It’s important to note that with a merchant account, you don’t get direct access to the money held in your account, just like a regular account. In a merchant account, the merchant account provider moves the funds to your designated bank account after clearing the transactions.

The transfer process usually takes 3-5 business days. However, some providers offer quicker transfers, like next-day or even same-day funding, usually for an added fee. 

Is it necessary to have a merchant account for your business?

For most merchants, the answer is straightforward: YES. You can’t accept credit or debit cards when you operate your business without a merchant account, and your sales may be affected without them. 

However, there are some cases where you can’t get a merchant account. For example, if you have a customer who never pays with a credit card, you don’t need a service or want to spend money on something you don’t use. Also, you can’t get a merchant account when selling something the US government has prohibited. For instance, Cannabis products in the US can’t get a merchant account due to federal regulations banning credit card payments for these items.  

You can have a merchant account if you: –

• Have an established business with good and growing sales. 

• Want to provide an option of paying with credit and debit cards to your customers,

• Regularly process (or expect to process) over $5,000 per month 

• Willing to research providers, understand your contract, and negotiate details with sales representatives. 

• Want extra security features that a merchant account offers.

A merchant account is essential for customers who want to pay electronically or via credit and debit cards. 

Key Advantages of Merchant Accounts for Small Businesses 

1 – Accept Credit Cards:

The most significant advantage of having a merchant account is the ability to accept debit and credit card payments. Credit cards and debit cards have become a preference among customers for payments. Many businesses that prioritize customer experience and satisfaction often find that eliminating friction in the buying or payment acceptance processes helps get new customers and improve cash flow. 

2 – Payment acceptance in various currencies:

Accepting cashless payments from customers also allows merchant accounts to receive payments in different currencies. This feature gives merchant accounts the freedom to accept payments from international customers by using payment methods they are accustomed to. Accepting payments from around the world provides businesses with the advantage of broadening their horizon for payment acceptance worldwide. 

3 – Increased Sales:

Various studies and research have shown that customers purchase more when they can use credit cards or online transactions. Small businesses that accept credit cards are believed to have seen an increase in sales, which impacts the overall growth of your business. 

4 – Streamline Cash Flow:

Merchant accounts help small businesses improve their cash flow. They provide faster payments by relying on electronic payment options and streamlining their cash flow management with simple-to-manage payment data. When you have an active merchant account, it takes, on average, 1-2 days for you to receive electronic payments from credit and debit card purchases. 

When you allow electronic payments on your business, you receive your money soon after someone purchases something on your website. After receiving the money, you can put this cash into action to handle your operating costs, reinvest, or increase your profits. 

5 – Proving Business Credibility:

Nowadays, it is believed that if your business doesn’t accept cashless payments online, customers will see your company as outdated. However, setting up a merchant account and getting it approved means that you’re a legitimate and trustworthy business. This perception of business fosters trust among customers. 

Merchant accounts provide various advantages, but do you know how to set up a merchant account?

How to set up a merchant account?

Setting up a merchant account allows your business to accept various types of payments, from credit cards to electronic checks. Follow these steps to ensure a smooth process:

• Determine your needs: Consider the types of payments your business will need to accept, such as in-person, mobile, eCommerce, or over the phone. 

• Research providers: Compare service providers based on their costs, reliability, and support. 

• Apply: Complete the application provided by the merchant processor and submit any required documentation. 

• Underwriting: The provider will review your application and may conduct a credit check. They may also ask for additional information or clarification. 

• Approval: Once the underwriting process is complete, the provider will notify you if your account has been approved. 

• Set up equipment and software: Use the equipment and software provided by the merchant services provider or acquiring bank. 

• Test and start accepting payments: Test the system and begin receiving payments.

Final Thought: —

A merchant account has become a must-have for small businesses. All the small businesses that want to collect various cashless payments online from their app or website. Your transactions from cashless to electronic payments can help increase your sales, streamline cash flow, and have other effects that will improve your small business.