Merchant Account

If you’ve been thinking about getting a small business up and running or taking your existing business to the next level of convenience, a merchant account may be the best way to make your and your customers' lives a little bit easier.

A merchant account is necessary for any business that wishes to process credit or debit cards for payments. These accounts are only available to legitimate businesses, and proper credentials are necessary when setting one up. In today’s fast-paced and increasingly paper money-less society, credit card use is taken for granted and often expected of most businesses. Read on for some helpful information about merchant accounts and how they can work for you.

Account Providers
Merchant accounts can either be supplied by independent sales organizations (ISO), also known as member service providers (MSP), and merchant banks. Merchant banks differ from the more typical investment banks in that merchant banks make investments in a small business, say, with their own capital. ISO’s and MSP’s are third-party licensed brokers of credit card services that establish contracts with banks to handle credit card processing. These independent companies often offer additional services to merchants including equipment, sales and customer service, settlement management, paper storage and other back office services.

When considering an account provider, it is essential to verify the ISO’s credentials. A qualified ISO must be sponsored and certified by a legitimate parent bank and must declare its affiliation on any contracts. Be certain that the ISO you choose discloses its sponsorship by an FDIC insured bank before you sign any contracts.

Payment Processing
The vast majority of payments by credit or debit card today are processed with a credit card terminal. Credit card terminals are dedicated electronic devices that allow merchants to swipe cards through a special slot that automatically reads all pertinent information from the card's magnetic strip. Some more specialized credit card terminals can also verify checks, accept gift cards or allow merchants to manually key-in card numbers and expiration dates. Credit card terminals transfer card information to merchant banks or a third-party processor via a phone line or the Internet. In addition to being the quickest and easiest way to process credit cards, terminals offer cheaper processing rates and reduce credit card number theft.

Businesses who rarely process credit cards may find that a stand-alone terminal is not necessary. Transactions may also be made with the older, more manual method of the automated response unit, or ARU. An ARU allows merchants to enter credit card information with the keypad of a landline or cellular telephone and is usually used in tandem with an imprinter, a device that copies a credit card's embossed information and records sales information to create a receipt.

Businesses that operate online rather than through a physical storefront typically accept credit and debit card payments through a payment gateway, an e-commerce service specializing in processing credit card payments. Payment gateways are sometimes offered by merchant account providers, but more commonly are third-party operations.

Which Businesses Need a Merchant Account?
Nearly every business, from large corporate conglomerates to small, family run shops, can benefit from a merchant account. Regardless of the size and scale of a company, or the business sector in which it works, a merchant account can have a direct impact on revenue and customer satisfaction.

Each business sector requires a specific type of merchant account to meet its payment processing needs. For example, retail storefronts that conduct face to face business with their customers will need countertop terminal equipment to manually swipe credit cards. Retail storefront merchant accounts also include integrated reporting packages that are custom designed for the retail industry, so business owners can conveniently track and evaluate sales, and set goals for future growth.

Businesses that conduct most of their transactions online, which are increasingly popular, need an Internet merchant account to process card-not-present transactions. Online credit card processing packages feature Internet gateway and virtual terminal applications that allow merchants to process transactions in real time, monitor payments, and keep their customer's data safe and secure.

Mobile merchants that conduct business on the go need a wireless merchant account to swipe and process credit cards from anywhere. This convenient payment processing option allows merchants to accept credit cards with their cell phones, or with compact, easy to use wireless terminal equipment.

Whether your business operates from a storefront, on the Internet or both, a merchant account not only makes life simpler for you and your customers, but it also lends an extra bit of legitimacy to your operation. The ability to process credit and debit cards becomes ever more essential as day-to-day transactions in every arena, from the grocery store to the doctor's office, involve less paper money and more plastic. With careful research and informed choices, the decision to accept credit can be a no-brainer.