There are many advantages to a business merchant account. Having a business merchant account enables your business to accept credit cards, giving your customers more flexibility to pay for items with a credit or debit card and not cash only. With a business merchant account you are able to accept credit cards in person, over the phone, or online increasing your business credit.
By having a business merchant account your sale potential will increase. Many merchants have seen an increase in sales by simply posting logos on ads and their websites. The average cash sale is $30, check sales are $52, and credit card sales average $76. Having a business merchant account will cost your business a percentage of the earnings. Termed merchant accounts, accepting credit cards usually costs about 2% to 4% of the purchase amount. For every $1 in purchases, you would keep $0.96 or $0.98 of that dollar.
Most merchant card processing companies will provide the credit card machines at no costs, and provide customer service to ensure your business can easily and quickly implement the system. The credit card terminals or software for processing payments can be purchased outright or leased as well. There are a number of different types of payment terminals available to businesses. For example PIN pads which are payment units that give merchants the ability to accept pin entered transactions. These are the most common in many businesses.
You receive the money from the transactions in your business checking account within two-three business days. The monthly statements at the end of month tracks sales volume and deposit the money into your account easier. The process of applying for a business merchant account is identical to applying for a business loan. Essentially the merchant account is offering your business a funding option, and they will be responsible for all transaction charges. The application will ask for you business financial information, references and history of your business account.
With a business merchant account you can participate in what is called factoring or cash advancing. Business cash advance companies provide funds, not loans, based on your future credit card sales. The advance is paid back with a small daily deduction from your future credit card sales. Advances will not report on your credit and will help improve your cash flow. This enables your business to have access to fast cash that can be used for pressing needs, such as expansion, debt reduction, equipment purchasing, etc. Those are the positive factors in having a business merchant account, unfortunately there are risks as well. Credit card risk refers to the risk of merchant disputes a charge or also known as "charge backs". Charge backs are not related to charges or credits, but instead refer to unhappy customers initiating a dispute of a charge that has shown up on their statement. Common circumstances why a consumer would dispute a charge, either false charges, card number was misappropriated by another, and charges were not approved or merchandise was less quality that what was promised.
Sometimes charge backs are not initiated by the cardholder but instead by the card issuing bank. Once this occurs the bank will request proof of sale, which would usually consist of a signed sale receipt. The bank will then decide on payment from your business and or financial lender. There are ways to avoid these risks by ensuring that their authorization request process is secure and efficient. There are also fees with having a merchant account. Here's a list of some of the typical fees involved with a merchant account:
Just as you would with any other business decision, before you sign up for a merchant account, make sure you read all of the terms and conditions so you know exactly what you're getting into and have all the information you need to make an accurate decision.
Corporate Credit Concepts specializes in business merchants accounts. For more information about business merchant account has it might benefit your business, please CLICK HERE for a free phone consultation.