You Own a Small Business – Can a Merchant Account Provider Provide You With What You Need?
Check and cash usage is dropping, while online and card payments are on the rise. To harness this, a small business must have access to a merchant account, which will allow you to receive payments in a variety of ways. This article will discuss the benefits and pitfalls of having access to a merchant account.
- Start processing credit card payments
One of the most important and most sought after benefits of having a merchant account is the ability to accept credit and debit card payments. As these methods rise in popularity, customer demand will shift from cash payments to card transactions. Small businesses who want to stay on top of this trend can improve customer experience by eliminating any friction caused by the lack of a preferred payment methods.
- Increased sales
There have been a number of studies over the years, which have shown that customers tend to spend more money if they are given the option to use cards over cash. One survey from Intuit found that 83% of small businesses that have started accepting credit cards saw an increase in sales–sometimes by as much as 500% or more. Needless to say, this is very positive for the growth of your business.
- Easier money management
Electronic payments such as card and online payments, improve cash flow management and forecasting, by eliminating the need for the many operations that revolve around cash payments. Cash has to be moved, counted and secured, while electronic payments are simply transferred from one account to the other, only taking the form of cash when necessary.
- No bounced checks
Checks also have their problems when compared to electronic payments. There is a lot of hassle and cost when dealing with a bounced check. On top of that, you can opt for a system that allows you to take in recurring payments straight from the client’s debit or credit card, once again streamlining operations and removing any unpleasantness that may occur due to a bad check.
- It is more convenient for the customer
Finally, being able to accept credit and debit cards leads to an experience that is more convenient for the customer. The more options you give your clients, the happier they’ll be to do business with you. You want to be able to accept cards, online payments, mobile payments and recurring billing, if you think you have the business model and the customer base for it.
What Is a Merchant Account?
A merchant account is basically a type of bank account that helps businesses process electronic payments such as credit cards, debit cards and other types of charge cards. Companies with a merchant account will need to work with a merchant acquiring bank, which is the institution that actually processes the payment.
In addition to being essential to any modern-day business, a merchant account is necessary to help process electronic payments both online and in person, as well as to make payments to vendors, employees and contractors. It all works because of the fees that are taken out each time a transaction is made, though the services and capabilities that a merchant account provides makes the fees well worth it.
How Merchant Accounts Work
For the most part, a merchant account is a crucial financial tool that businesses need to process and make electronic payments. Once you have a merchant account, you can plug that information into your payment gateway on your website or at your point-of-sale terminal, allowing you to seamlessly process electronic payments while reducing the fees associated with typical credit card processors.
That said, if your business has no need to process electronic payments of any type and you only want to accept cash in person, you won’t need a merchant account. But businesses that operate on cash only are leaving a lot of money on the table. Many consumers don’t carry cash at all these days, and many more have actually stopped carrying cash due to the pandemic.
If you have no desire to do business online and accept instant payments from your customers that would rather pay you by credit card than cash, you can certainly do so, but you’re doing your business a disservice by reducing the ways in which customers can pay you. On the other hand, any sort of online business requires a merchant account or another type of credit card processor to do business at all since there’s no alternative way to get those funds in your hands.
All in all, opening a merchant account is a great, cost effective way for a business to expand its operations, reach new customers, and keep the existing ones happy. Some merchant account providers have no application fees, very low rates, and a plethora of free special offers with every sign up.
For more information on how a merchant account provider can help your small business, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.