Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

E-Commerce 101: Merchant Account Setup

Written by Erik Larson, Community Blogger | Feb 12, 2018 12:02 AM

If you've started a business that has a good potential, receiving a credit card payment will be mandatory. In order to have this option enabled, the first thing to be done is to make a merchant account. A merchant account will provide you credit card payment methods, allowing people to make transactions through their computers and smartphones. Since this is the most utilized way of payment, be sure to acknowledge the requirements needed for this method.

What Is a Merchant Account?

A Merchant account refers to a bank account that allows a business to accept payments from customers using both credit and debit cards. If you run a business, a merchant account can help you ease the way of customers pay for your services or products. It can also provide you reduced fees per transactions, at the cost of a bigger monthly fee. In case you run into any difficulties, you shouldn't worry, since merchant accounts have a great customer support.

Choose The Right Merchant Account Provider

This is one of the most important things to do before setting up a merchant account. The type of business you run and in which area you operate in will have a big influence on your choice. As the providers change, so does the policy. Merchant accounts will require you to accept the contractual monthly fee, but will charge you less per transactions. This is a great way of managing payments for a well-established company.

If you're starting a business or generating less than $2.000 monthly, a good option for you would be a setting up PayPal account. But, if you have a big business, then picking the right merchant account provider will be crucial for optimizing your work. Start-up fees range from $50 to $100, while monthly fees vary from $4 to $20. Transaction fees are also included and can reach up to 50%. This is the reason why you should do a thorough research on the providers and requirements.

Set Up a Business Profile

Having a business profile is of major importance for gaining a merchant account. As they are not provided to everyone, a bank has to be ensured that your business is at low risk of failing. A profile will also help the provider to setup your account efficiently. There are few things to determine in order to optimize your merchant account.

Way of payment - Are you going to accept payments through your website? Do you want to be able of processing payments through your phone? Whether you are using a virtual or an actual credit card terminal, this is one of the first things to be planned for developing a profile.

Sales volume - Whether you're going to transfer your business solely to card payments or maintain the cash option as well, you have to roughly acknowledge the volume before discussing options with a merchant account provider.

Seasonal business or not - If you are running a seasonal business (e.g. travel company), you should inform yourself about merchant account providers that offer a seasonal downtime. This can save you a lot of unnecessary expenses.

Two Ways of Applying

If you're opting for a merchant account, there are two ways for applying. The first solution is to make an agreement with a member bank that has a processing relationship with Visa and MasterCard. This way you can receive payments from all over the world. If you're not familiar with the payment process, you should check out a payment processing guide for merchants.

If you run a business that is at high risk or you have a bad credit, there's a possibility that your bank won't provide you with benefits of a merchant account. In this case, you should aim for independent credit card processing companies. These organizations will take higher risk than banks, but will also charge higher fees. Be sure to check what fees are you confronted with before applying for an independent company. Also, applying for several merchant accounts is not forbidden, so you can use different options to see which agreement offers the best benefits.

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