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Understanding The Basics Of A Merchant Account

Posted by Tyler Thompson | November 11, 2009 .
by Tyler Thompson

You might want to ask yourself what is a merchant account. A merchant account is not a bank account. It is a special account that works in Alliance with a payment gateway, that actually transmits the billing information from credit cards and checks, and your basic business bank account.

Where can you get a merchant account? Unfortunately you cannot just enter a local bank and ask for a merchant account. In fact most banks do not have the capability to provide such a service. Most banks do not want to handle this aspect of funds because accepting payments over the internet has a higher risk of fraudulent activities such as unauthorized use of credit cards. So for those specific reasons, it is going to be of your best interest to go through a specialized financial institution that works directly with internet payment processing.

Now you may already know what a merchant account is and why it is important to have one for your business but let me remind you of the benefits of having one. With a merchant account you can quickly accept payments. You can also avoid annoyances such as collecting money for services when a customer’s check bounces due to insufficient funds. With a gateway processor, it will let you know immediately if the funds are available in your customer’s account for payment. Many gateway processors will even let you scan a customer’s check (if they are face to face with you) to see if there are sufficient funds.

Merchant accounts can work for every type of business. Whether you deal with customers face to face, over the phone or online only. You will have the capabilities to accept their payment instantly. Once the payment gateway processes the credit card information and takes the funds, it then redeposits the funds into your personal account.

Merchant accounts are not for personal use mainly because there would be no need to set up a merchant account and pay all the fees associated with it, if you were not earning money from online sales.

To get started with a merchant account there are some steps to take. You will need to apply and get approved for an account. Before you apply you should make sure your business is registered in the US. If you are not registered then that doesn’t automatically mean you will be declined for a merchant account but it may slow the approval process and will also make your account a high risk account. With a high risk status, your fees may cost more.

About the Author:
Tyler likes to write about merchant account topics: mobile merchant account and a web merchant account.

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