Today, one of the most important enhancements that a business owner can do for the company is to open a merchant account to be able to accept credit card payments. For many consumers, paying with credit card is not just an option, but often, a necessity.
Hence, if you do not have a merchant account, you can imagine how much you could lose from credit card paying customers.
If you are a business owner, have you thought about applying for merchant account? Before you do, it’s important to understand the basics of the credit card processing, including the cost of accepting credit card payments.
What is a Merchant account?
This type of account is exclusively for businesses that accept credit card payments. A merchant account can be obtained from a banking institution, a credit card company, or a third party credit card merchant processing company.
A business owner may choose to apply for a retail merchant account to be able to accept payments from credit card paying customers who personally visit the store. The process is done by swiping the credit card through a credit card terminal.
Another option is to apply for a Mail to Order merchant account which enables customers to order via telephone or through email. Because the credit card cannot be manually swiped, the credit card information must be entered into the terminal installed in the seller’s computer.
Lastly, the internet merchant account enables a seller to accept customer orders directly from the internet and virtually process credit card payments. This type of merchant account makes use of a payment gateway system and a shopping cart software application.
What About the Costs?
The exact fees vary, depending on the merchant account provider. Generally, there is a small fee charged for every transaction. To save on costs, a seller may choose to process payments by batch. For instance, credit card payment received by the end of the day will be sent to the credit card processing company at once for processing.
Usually, a merchant account company will charge a holdback fee, which is reserved in the seller’s account. This fund will be used in case there are chargebacks or disputes. When payment has been cleared, the holdback fee is released.
Most credit card processing company also charges a penalty fee for inputting wrong information. Even a single wrong detail can cost you extra fees so it’s very important to verify the information on the credit card before entering it into the terminal for processing.
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About the Author:
Melanie James has spent the last 14 years working with businesses to implement quick, effective and inexpensive changes to their businesses to increase productivity and their bottom line.