A small online business can benefit in several ways from working with a acquiring bank. An acquiring bank has many functions, working with both multinational corporations and small businesses. For small businesses, an acquiring bank acts as a loaner and as a provider of merchant accounts and credit card processing.
A purely online business however will find it hard to be approved for a merchant account at their local bank, since many traditional acquiring banks require both a brick-and-mortar and an online component before considering a company. This is where independent sales organizations come in, acting as a middle man between the merchant bank and the online company.
Small online businesses also have the option of using a third party provider in order to process card payments. However, is this option better than the one provided by an acquiring bank? Let’s find out.
Merchant account vs. a third party
If you are a startup business, the process of being approved for a merchant account is straightforward. Once you produce any requested documents and proof of viability, a merchant account does have several distinct advantages. The first is expediency. With a merchant account, a payment is directly deposited into your account, and the funds are available within one to two days. With a third party, the funds go through an additional transfer step, which delays the whole procedure, typically for anywhere from 11 to 30 days.
Merchant accounts can also be more cost effective due to their fee structure. A third party on the other hand tends to charge much higher transaction fees. If you have a business that produces a high transaction volume each month, you will save money with a merchant account.
On the customer side, a merchant account makes the transaction more comfortable by keeping it on-site. With a third party transaction, a user is redirected to their payment page, and your company name does not show up on the bill. This can lead to confusion for the customer, who might then suspect credit card fraud.
Finally, if you go with a merchant account, you can expect a much higher standard of customer service. Whenever you have issues with a transaction or with your account, you can solve the problem immediately.
For more information about the benefits of working with a merchant bank, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.