A merchant account is an account that allows you to accept credit cards from your customers and then deposits the sales amount (minus processing fees) into your own bank account. There are different types of merchant accounts to accommodate different business types. Below is a basic overview of what a merchant account involves and how one works.
What Are The Different Types Of Merchant Accounts?
There are a number of different types of accounts. There is a small business merchant account that uses Dial Pay (just a cell phone) to process credit cards. This is especially good for mobile merchants as well. There are also wireless merchant accounts that are used with wireless terminals. You can also find accounts that are specialized for businesses that do a very large volume of transactions and transaction sizes.
Even within the above mentioned accounts there are variences. Retail accounts are ones that do face to face card transactions. Mo/To or Mail order Telephone order accounts are for cardholder not present transactions. These could be orders taken over the phone or internet or Dialpay.
How Your Funds Are Deposited
With most merchant accounts you will receive your funds into your bank account within 2 business days. Funds are normally not deposited on the weekends or holidays. In some instances it may take up to 5 business days to deposit for accounts that are considered a higher risk due to poor credit issues. Some merchant service providers extend the deposit time like this for merchants that would otherwise would not have been approved.
On the other hand, many processors will allow you to have what is called a “zero day hold” or as some call it “next day funding.” In such a case you will receive your funds the very next business day.
Should I Accept Credit Cards?
The answer to that is almost always yes. You simply cannot afford to lose out on customers that do not have cash on hand to purchase your goods or services. Having one also gives your business a basic level of professionalism.
Are There Any Risks To Having A Merchant Account?
The risks are small but there are some things to keep in mind. When setting up your account, make sure the provider is legit. There are some bad people out there doing whatever they can to get there hands on your hard earned cash. Be sure to do a little background checking before committing your personal information.
There is also the risk of losing your merchant account. Be sure to always provide exchanges or refunds and have that policy be very clear to your customers. Excessive charge-backs can cause your account to be terminated and no credit card processor will be willing to approve of your account if you try to go elsewhere. You also want to be sure to stay within the transaction size and monthly estimated volume that you agreed to when you applied with your provider. Going over these can cause your funds to be held for up to 6 months and even account termination.
