Based on a 2013 report [1], by 2011, 66% of global spending involved cashless methods. The volume of cashless transactions was projected to be growing at an annual rate of Given the rise cashless payments, the modern business must adapt to this growing demographic that prefers not to carry hard cash if it is to maintain a competitive edge.

A merchant account is designed to facilitate the processing of cashless payments. Initially set up for credit card payments, options have arisen to cater to emerging payment methods such as mobile wallets, reloadable prepaid cards, reward cards and gift cards. The business is allocated a unique merchant ID which enables the account provider to verify customer information during the processing of the payment.

To allow the business owner to successfully navigate the myriad offerings available in terms of merchant accounts, various factors come into play, some unique to the particular business and some general. This article highlights 5 things that you should look for in a merchant account provider.

Costs involved
Apart from the overall fit into the business budget, the business needs to take into account the pricing method used by the merchant account provider and the transparency of the account costs. Currently, there are three common pricing plans available: flat rate, tiered and interchange-plus. Experts recommend interchange-plus pricing, which involves a percentage of the processed payment as well as a fixed cost per transaction. In addition to the payment plan, the other fees must be taken into account, with some account providers having a number of hidden fees listed in the fine print. Such fees may include monthly or annual account maintenance fees, authorization fees, customer service fees and online processing fees.

Modes of Payment Supported
For maximum flexibility, a merchant account that supports a wide variety of payment options is necessary. The major debit and credit cards used by the clientele should be taken in to consideration, as well as the type of card- a versatile system supporting both modern chip-based EMV cards as well as the traditional magnetic stripe cards would be the best option. Additional payment methods common in the area might include mobile money and prepaid gift cards. Where online payment is required, it should be noted that in addition to the merchant account, the business will require an online payment gateway, and, depending on the account provider, this might be bundled with the merchant account as a single solution, or one may be required to separately source for a gateway provider.

Integration with book-keeping software
Since one major purpose of incorporating cashless payment is for increased convenience, the ability to integrate the payment processing system with existing book-keeping software is an important feature for the business owner. This eliminates duplication of data entry tasks, with payments logged into the relevant accounts as they are received and processed. A number of merchant account providers provide integration with QuickBooks, thus, for a business already using it for record keeping, the addition of a payment method that can seamlessly be integrated into the existing setup is a definite plus.

Account set up
Down time can be costly for a business, therefore the time taken to set up the merchant account, from the signing of the contract to the processing of the first payment needs to be taken into account. Many providers offer free equipment on account setup, and will also facilitate the installation of the equipment and setup of necessary software. The shorter the time it takes to get the system up and running, the more attractive the account provider.

Online Payment Features
Given the rise in business transacted online, available options for online payments are a key feature to look out for. Accounts that allow for online shopping cart integration are a necessity for businesses that allow customers to make orders directly from their websites. Additionally, for businesses that may have international customers, the integration of IP filtering is a convenient feature, particularly in cases where shipping charges may need to be included in the final payment. For service providers, the provision of recurrent billing is convenient, particularly for subscription type services.

All said, there is no one-size fits all merchant account, but the major factors listed above will go a long way in whittling down the list of potential account providers for the business owner.

[1] “Mastercard Cashless Journey Report”, Mastercard Advisors, 2013.

It can prove to be intimidating starting a new merchant account. Why? With a lot of information out there, it’s challenging wading through it all. Majority of people are normally pressed for time, and this makes it difficult weighing all aspects. Deciding on which kind of account to open and how to open it is vital. In this article, we are going to make your task simpler, since it’s going to discuss 10 things to know when opening a merchant account. Read on.

Note: Your merchant account is more than a mere status symbol when you mean business. It’s a part of a savvy and solid business plan. Therefore , before taking the plunge and opening a merchant account, these 10 points are going to be important.

1. The Account Type You’re Using

You should be aware that a merchant account is not just, on the surface, a merchant account. There are three major kinds of merchant account. They are: MOTO Merchant Account, Retail Merchant Account, and Internet Merchant account. Therefore, it’s important that you take some time to make sure you’re opening the most appropriate account for your business. Even when your business is sole proprietorship, you are going to require a business bank account prior to opening your merchant bank account. Well, you’re able to open an account in just around 15 minutes at your local branch. You will only be required to have your business license employer identification number (EIN)-which may be your social security number when yours is a sole proprietorship without employees. Also you may apply for EIN and instantly get it by visiting IRS website.

2. Know the Operating Cost You Should Expect

Different accounts are going to come with different operating costs or fees. Therefore, to stay on top of things, you should exactly know which fees or costs affect your account. Make some note of the fees that are imposed by each provider prior to making a decision on your choice. Are they charging for the credit card reader or it’s provided for free? Know all these details before opening a merchant account.

3. What’s your Risk Category

Your services or products are going to be grouped officially into risk categories, which range from High to Low-risk. This grouping or classification of your services or products may have some impact on what kind of a merchant account the business is eligible for, and the amount of fees you may end up paying. Before signing up, ensure you discuss this aspect with your service provider.

4. Do You Posses the Correct Licensing? 

Several service providers will require you to possess a business license prior to giving you a merchant account ID or providing you access to an account. Therefore, you should check if you possess the correct licensing before starting the process of opening a merchant account.

5. And is the Merchant Account Going To Be Compatible with the Business Model?

Not all accounts are going to suit, for instance, an online e-commerce model, while other accounts are going to be more appropriate for this means of selling than the traditional shop selling. You need also to discuss this with your merchant account service provider, and make sure you find the most appropriate account for your business.

6. The Methods of Payment You Need to Support

While majority of retailers are going to almost exclusively deal in debit and credit card, and cash transactions, there are several other means of payment which your merchant account might need to support. They range from Interactive Voice Response to Netbanking to cheques. Make some list of what you need to support, and ensure that you’re covered.

7. The Level of Support You Require

A reputable merchant account service provider is going to operate a host of various services as well as support packages at differing fees to the account holder. You should decide the level of support you require, and clearly communicate this to your provider, negotiating yourself some deal which suits your business and your budget.

8. The Level of Reporting Capability That You Require

In business world, knowledge is power. Therefore, it’s significant you gain access to as much information as possible relating to the organization. One great way of achieving this is reporting. However, different accounts are going to provide different levels of report commissioning. Therefore, it’s vital to evaluate if or not your account is going to satisfy your requirements before proceeding.

9. What is the Cost of Termination?

When you are not satisfied with the service you’re provided, and you need to move to another provider, you might find yourself hit hard by a termination fee. Majority of reputable service providers are going to spell out this plain and clear to you before signing up. But always ensure you are aware of this information before you proceed.

10. What’s the History of Your Service Provider?

Choosing your service provider is just as crucial as choosing the account itself. You want a provider with a clean and demonstrable track record in client satisfaction, functionality, security, and reliability

Cashless banking has helped businesses to increase their profit. The cost of handling cash, like having a dedicated cashier and taking it to deposit at the banks, have been reduced or removed entirely. The amount saved through the reduction in the cost of handling cash is automatically added to the profit line of the business.

Add the reduced cost of handling cash to the fact that most people prefer debit and credit cards over carrying physical cash; then it becomes clear why businesses are exploring every cashless method of payment. Merchant accounts happen to be one of the preferred methods of receiving payments from the customers of a business.

Explained: MERCHANT ACCOUNT
A merchant account is a system of banking that enables businesses to either receive payments directly through the website of a business or through debit and credit cards from their customers. The business is giving a Merchant ID number when a Merchant Account is opened. This Merchant ID Number is used to identify the processor of the business; and it also serves as a link to the banking institution’s upstream which deposits the money received into the bank account of the business after authorizing it. This unique number is used in all the dealings of a business with its Merchant Account provider.

The Merchant Account works under the agreement that the business, known as the acceptor, will have its payment card transactions settled by a bank offering Merchant Account services. In some cases, aggregators like Member Service Providers (MSP) or Independent Sales Organizations (ISO), are a part of the agreement.

After the business opens a Merchant Account and is given a Merchant ID Number, a Credit Card Reader is given to the business at no cost in most cases. The Credit Card Reader can read the storage medium, like a computer chip for instance, of a credit card.

Businesses stand to gain a lot when they open a Merchant Account. Some of the benefits include:

A. INCREASED SALES: Since most consumers carry their debit or credit cards around, there is the tendency for them not to have so much cash on them. However, the consumer may walk into a shop to pick up a $1 item and see an item on a shelf that he or she may desire to buy. This customer may probably have walked away with only the $1 item that was budgeted for; but with the availability of a Credit Card Reader, the customer may end up picking up the item. This has increased sales for the shop owner because if the Credit Card Reader option was not available, the customer may end up buying the same item in another store.

B. INCREASED PROFIT: There is usually a transaction cost of between 2% to 4% when credit cards are accepted as a means of payment. This translates to between $96 to $98 for a $100 sale that is made. What most businesses now do is to make a slight increase of between 2% to 4% in their sales price as a way to offset the credit card transaction cost. More often than not, customers do not notice this price change because it is very negligible.

By so doing, the transaction cost of the credit card is transferred to the customer. There is also the increase in profit when a customer pays cash for a product purchased.

C. SAVES MONEY AND TIME: Keeping excess cash in a store is definitely not advisable. It might be lost through theft or a small fire probably. With a Merchant Account in place, the cost of paying a cashier is saved. Time is also saved because there will not be any cause to shuttle to and fro the bank in order to deposit the cash received from sales.

D. ACCESS TO CREDIT: With a Credit Card Reader in place, some financial institutions will be open to granting the business with the much needed cash advance that will help in the expansion of the business. This increase in cash flow will definitely help in the growth of the business.

IN CONCLUSION
Businesses are opened for the sole purpose of making profit. This is what having a Merchant Account offers to businesses. With a Merchant Account, the frequency of an impulse buyer leaving the shop without making a purchase is reduced to the barest minimum. This in turn translates to the sales of more products or services.

With the possibility of getting access to a cash advance that will help in business expansion, there is no reason why any business that does not have a Merchant Account should not get one as soon as possible.

For those not conversant with what a merchant account entails, a merchant account can basically be defined as a type of bank account that lets businesses accept payments in a number of ways, typically though the use of credit and debit cards. Merchant accounts come with numerous benefits not only to large businesses but also small medium enterprises and as such, it is imperative for such businesses to open these accounts. The following post seeks to highlight some of the benefits small businesses can acquire from merchant accounts as well as the steps that are taken when setting up a merchant account.

Benefits of having Merchant Accounts

The modern day consumers are increasingly adopting debit and credit cards as preferred methods of payment over the conventional cash payment. Thus, having multiple payment options will go a long way in ensuring the revenue of business is up which translates to profitability and survivability of the business. Some of the other benefits associated with merchants accounts include:

Increased productivity: keeping plastic money is much easier than keeping cash as it conveniently saves a considerable amount of having to count cash. This enhances the productivity of employees as it saves a substantial amount of time which can be invested in other areas.

Customer satisfaction: according to Smith, a financial analyst with New York Stock Exchange (NYSE), the popularity of cashless payment option has in the recent past grown to an all-time high. Hence, a majority of the consumers now prefer using checks, debit, and credit cards when doing transactions. Having a flexible payment method will definitely lead to customer satisfaction and thereafter customer loyalty and retention which are essential in the running of a business.

Enhanced management of cash: opening a merchant account will also enables better control of resources that may sometimes be lost through theft or miscalculations when returning change. As such, adopting merchant accounts help in the overall organization and management of a much better cash flow.

How to Set Up a Small Business Merchant Account

According to a recent publication by the Entrepreneur, many start-ups and small-medium sized businesses fail to live up to their 5th year and this is mainly attributed to their failure to sign up for merchant accounts. The following section outline steps every business person should follow to ensure they get a merchant account that accommodates their needs.

Step 1 Research

Research is the first step any business person should undertake to ensure they do not end up with a costly and time wasting credit card. These searches can be done through search engines such as Google as they provide useful information such as the different processing rate plans as well as some of the fees that different providers charge. Similarly, it is important to note that there are different merchant accounts available for business owners if they cannot be able to obtain one from the bank. Hence, they can also get similar service from independent credit card companies as well as internet merchant which is suitable if they deal with an e-commerce site.

Step 2 Setting Up business Profile

This should be done after he or she has established the ideal merchant account provider. In this step, the businesses provide the merchant account providers with information that enables them to know what type of processing risk involved, and how he or she wants the account to be setup. When setting up a business profile, businesses should be able to expound on how they intend to accept payments, how much volume they intend to process monthly or yearly, their average ticket price, the nature of business they operate I.e., permanent or seasonal, the type of credit card brands they intend to accept, and the different ways they want to accept payments i.e. through the website, virtual terminal or even mobile phones.

Step 3 Application stage

After setting up a business profile, the next phase is the application stage. In this stage, business persons apply to a handful of merchant providers which enables them to have a bargaining chip against the different providers.

Step 4 Negotiation of rates and terms

When applications go through, businesses persons should be able to negotiate the best rates and terms before setting up an account with their potential merchant account provider. This ensures they get better deals.

Step 5 Setting up bank account

After being approved for a merchant account, businesses are typically given merchant id which means they are now ready to start accepting credit and debit card payments. Good merchant providers offer user-friendly software packages that allow business to process their transactions with so much ease.

What Is a Merchant Account?

A merchant account is basically an agreement between a business or seller, the seller’s bank and the payment processor as to the settlement of transactions made through debit cards and credit cards. It enables the business to accept all credit card and debit card transactions.

Another way of looking at a merchant account is as an online account that holds your money temporarily, mostly between two days and seven days, until it is automatically sent to your actual bank account.

Merchant accounts work hand in hand with payment gateways. When clients buy goods from your online site, they are required to enter their credit card details in the checking process. The Payment gateways checks the information submitted by the client and if it matches with the information held with the credit card company, then the transaction is approved and the funds are sent to your merchant account.

In order for a business to operate a merchant account, it will be provided with a Merchant Identification Number otherwise known as a merchant Id by their merchant account provider. This helps banks and other credit card institutions in identifying the business as accepting credit card payments.

What are the Different Types of Merchant Accounts?

Merchant accounts are classified based on how they collect credit card information and how they conduct their transactions. The following are the main types:

. Retail merchants. They conduct their business from an office setting and normally interact with their clients face- to-face. The clients physically swipe their credit cards on a terminal or a point-of- sale system.

. Restaurant merchants. They are similar to retail merchants in that they interact with the clients physically. However the transaction is usually adjusted for tips using a special tip function. Once the client’s transaction is authorized, an extra price for the tip is included.

• Wireless or Mobile merchants. They require to authorize clients’ transactions at different locations and they do this using portable or mobile terminals.
• Lodging merchants. They are found in hotels and lodges and usually authorize a customer’s transaction for a specified amount before hand, and depending on the length of stay will adjust the transaction a day or so later for the total amount.
• Keyed Face to Face merchants. The main difference between keyed face-to-face merchants and retail merchants is that while they do end up meeting their clients to deliver their products or services, transactions are carried out either through a telephone call, email or the internet and manually key in the credit card details into a terminal.
• Mail order / Telephone Order Merchants M.O.T.O, will hardly ever meet their clients face-to-face. They communicate through email, the internet or telephone conversation where the client’s credit card information is entered in a terminal. Once the transaction is authorized then the goods are delivered or shipped to the client’s location.
• E-commerce or Internet merchants. They conduct their business online or through a website where all the information is gathered and processed in real time through a payment gateway. The good are then shipped to the client’s location once the transaction is authorized and the payment is processed.

Merchant Accounts for Online Business

There are mainly three types of merchant accounts that are available online:

Internet Merchant Accounts. Here the website is the basis of conducting business transactions. This account is opened online through a form from the merchant bank.

Online Merchant Accounts. These are accounts that are opened online. They are beneficial especially where the business lacks a physical presence and can be opened by most other businesses as well.

Merchant Services. These types of accounts offer credit card processing software to the owner, allowing for batch processing of transactions. This allow for all the transactions having taken place within a particular period to be processed at once.

Why you Need a Merchant Account ?

What are the advantages of a merchant account?

Improvement of business revenue. Almost every adult carries a credit card or debit card. This is brought about by the need to avoid carrying large amounts of cash. Most purchases made are therefore via credit card. The ability to perform credit card transactions by a business will therefore result in an increase in revenue.

Increased efficiency. Accepting debit and credit card payments at fast food businesses helps reduce the waiting lines by processing customer transactions faster.

Customer satisfaction. By giving clients multiple options through which they can make payments such as through cash, debit cards and credit cards, you give them complete control of how they want to handle their cash leading to customer satisfaction.

Expanding client base. This is done by conducting business online through your merchant account. You are able to reach a larger demographic area and this will result in more revenue.