Saturday, October 30th, 2021
Merchant accounts are designed to process credit card transactions for businesses. They provide the connection, software, and oftentimes, the hardware needed to accept credit cards as a form of payment. Merchants can choose between different account types depending on their business’s needs.
If you’re starting a new business or looking for ways to grow the existing one, accepting credit card payments is one of the best online sales strategies. But merchant accounts are not without blemishes.
Discover their pros and cons below.
Merchant Account: How Does it Benefit Your Small Business?
A merchant account offers many benefits for businesses. If you don’t have one, here are the top 5 reasons why they are so useful:
- Convert more visitors
Having a merchant account is important because it allows you to accept payments through your website, which means that customers can make purchases without having to leave your site. This increases the chances that they’ll complete the transaction.
- You get a branding opportunity
Every time your customers pay with your company’s payment gateway, they see your logo and branding information. This is a great chance to build brand recognition and instill trust in potential customers.
- Collect card payments conveniently
As a merchant, you will be able to accept credit card payments from various customers. You can also choose the payment processor that you want to use. With your preferred payment processor, it is possible for you to get low processing rates and other benefits.
The Potential Downsides of a Merchant Account
- High-risk considerations
Merchant accounts are divided into low-risk and high-risk categories. If you run a high-risk business, you may pay more in fees and face various limitations depending on your merchant account provider.
- High processing rates
Some providers charge high credit card processing rates for their low and high-risk merchant accounts. Be sure to double-check all the fees (and the total cost of processing) before committing to a deal.
- It may affect cash-flow
In essence, a merchant account is a reserve account– your sales revenue stays there temporarily before being transferred to your business account. This means you can’t access this money until it reaches your business bank account, and may mean cash flow problems for growing businesses.
Merchant accounts can be very beneficial to your business because they allow you to accept credit cards, but they also come with their own set of risks. Consulting an experienced merchant account provider will help you understand the benefits, costs, and risks of using a merchant account.
Topics discussed in this article:
- Merchant Account