Merchant Accounts and Your Business: What IS it?

The first step in maximizing revenue for your business has got to be making the steps to accept credit cards from your customers. Allowing them the ability to access funds that are outside of their cash-on-hand budget is the key making bigger sales.

If customer A only plans on spending $80 at your store, she is going to stop at the ATM and make sure she has that cash available for her trip. But when she gets to your establishment, what happens when she just can't resist that extra $19 item? This is where you make your money; even though she has only budgeted $80, because you will allow her to access those funds that she doesn't have on-hand, chances are she is going to spend, spend, spend.
The way to enable your business to reap the benefits of customers who use credit cards (which, these days, who doesn't use their credit or debit cards anymore?) is through a merchant account.

There are many different types of merchant accounts, different ways to acquire them and different ways to use them, but for now we're going to break down the logistics of exactly what it is they do, specifically, so we can better understand all the other benefits that come with them.
A merchant account is, in essence, a contract with a bank or a merchant services provider that will allow you access to an account that processes, holds, and deposits and transfers funds from your customers' card accounts to your business bank accounts.

Still confused?
As previously mentioned, there are many different types of merchant accounts and merchant services available. But the typical merchant account comes with a credit card processing terminal; which is a piece of hardware with a keypad, a screen so you can read any information or prompts the machine requires your attention to, a printer for receipts, and a space to slide your customer’s credit card through, which reads the numbers and other pertinent information off of the magnetic strip.

1. Customer Z brings their desired purchases to the checkout counter
2. You (or your employee) total the transaction on your existing POS system, which most likely does not include your credit card processing terminal (unless you are a restaurant; this anomaly will be discussed further in a later article)
3. Customer Z produces their credit card
4. You (or your employee) swipes the credit card and follows the prompts
5. The merchant account that your credit card terminal is attached to will authorize the card and determine whether or not the funds are available and/or the account is in good standing
6. The receipt is produced and signed
7. The funds are held in the merchant account, until the end of the day when your charges are “batched,” and a deposit is made from your merchant account into a pre-determined business account.

There are many other particulars involved with merchant accounts, but as with driving a car, we should first know what happens when we turn the key before we are allowed to step on that gas pedal. Now that we are properly informed of the behind-the-scenes aspects, we can move forward to discussing further details including:

• Risk factors when determining eligibility for merchant accounts
• Different types of merchant accounts (online, third party, etc)
• The aforementioned restaurant/POS terminal equation
• Other merchant services that are often included with your account; ie, cash advances, factoring, etc.

As with most aspects involved in a personal or small business venture, new information can be overwhelming and difficult to comprehend.  Comments are always encouraged!

Complete our no obligation inquiry form below if you’d like more information on how Merchant Advisors can help your business.  A dedicated Advisor will contact you to discuss your specific needs. 

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Business Cash Advance Merchant Account Check by Phone/Online Merchant Gift Cards Check Conversion/Guarantee