A bank is an institution that handles mostly underwriting, international finance and business loans. They deal with both multinational corporations, due to their expertise in international trade, and small businesses, by providing financing options and payment processing services.
Banks and international trade
Due to the differences in value between two national currencies, the large volume and cost of the trade itself, and the complexity of the legal systems and financial mechanisms involved, international trade is often handled by banks. Banks issue letters of credit as a way to determine and fluctuate the value of a country’s economy based on its exports/imports.
For example, when a company exports X amount of goods, it is remunerated using letters of credit or LOCs. These LOCs can then be redeemed based on the value of the goods imported into the country overall. If a country exports more value than it imports, it has a trade surplus, and its currency strengthens. But when imports are more valuable than the total exports, the country has a trade deficit, and the currency weakens.
Banks and small business loans
Since relatively few small businesses export or import any goods, they deal with merchant banks on different terms. When it comes to small businesses, one advantage of working with a bank is the loan. Small businesses can have a hard time financing deals and various expansion plans due to their inability to go public and start an initial public offering. This is where banks come in, where they provide small businesses with the capital they need to enhance their operations.
Banks and merchant account services
Banks also offer merchant account services to small businesses. These services allow businesses to accept and process credit and debit cards. While brick and mortar stores stand to benefit from this feature, for online businesses, this feature is an absolute necessity, especially for e-commerce stores.
Many banks also offer the devices, payment gateways and payment processors needed to start accepting cards. For brick and mortar stores, this could mean card readers, receipt printers, mobile payment processors, touchscreen payment devices and many others. For online stores, payment processing is done through independent companies, or through proprietary gateways.
There are many banks to choose from, and there are various factors that businesses have to take into consideration before signing a contract. These factors include the payment processing fees, security features, early cancelation fees, the price of the equipment and many others. It is best to browse around, before deciding on a merchant account service from a particular provider.
For more information about business bank loans, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.