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Opening a Merchant Account for a Business
The merchant accounts are bank accounts that are used to accept payment made using credit cards and debit cards. This is an engagement that involves the merchant, the merchant bank and the payment processor concerning payments made sing the debit cards and the credit cards. Payment made by a customer using the debit card or the card for a product or service is deposited to the merchant account. Money is then transferred from the merchant account to the business bank account. This transaction is done at a frequency of once a week or daily. There are internet merchant accounts for businesses which transact online. For firms whose operation are done online and offline, they need to have the normal and internet merchant accounts.
Despite there being a scrutiny for the application of a merchant account, and the process is far from complex. Merchants have an opportunity to compare what different packages offered by different banks offer. Before an account is issued, they have to assess the risk elements of a business. The risks are assessed against the returns made by the business. The firm is also assessed against the time it has been in service. The risk element and stability of business is seen to be good for firms with many years of existence
The history of the business in terms of bankruptcies and defaults are put at focus. Firms with poor record are at a disadvantage. A risky profile does not automatically disqualify a merchant from getting an account. To minimize the risks in such a case, the initial setup costs and transaction fees will be high. The terms can be renegotiated, and the rates lowered once the business starts to use the merchant account well. The vendor will have an interest in whether the business is new to the merchant accounts or have history with the accounts. They will want to know how one fared with the account. For most of the new users, setting up am account do not involve lots of things.
Another area that the vendor would have interest in is the personal credit history of the business owner. Securing a merchant account may prove hard for a person with bad credit.
The internet merchant account is charged higher rates than the offline merchant account. This is due to the riskier nature of online merchant accounts. The near recent has seen the merchant accounts work with mobile phones. To use this facility; there is an app that needs to be downloaded to the phone. Soon after setting up the account with the phone, the merchant can start receiving payment with the system. This allows one to move out of the bound of the brick and mortar establishments.