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Getting started with a merchant account – 5 Steps

Posted by Alex Neir on Mon, April 18, 2011 @ 07:34 AM
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Getting started with a merchant account – 5 Steps

This guide is intended to help your business understand merchant services and arm you with the information you need to make an informed decision on setting up a merchant account.

  1. Step 1 – What is a merchant account?
  2. Step 2 – What kinds of merchant accounts are available?
  3. Step 3 – How long does it take to set up a merchant account?
  4. Step 4 – What do I need to know when setting up an account?
  5. Step 5 – Who should I use to set up the account?

What is a merchant account? Starting with the basics, a merchant account enables your business with the ability to accept credit cards payment for provided goods and services sold. It is important to understand three fundamental principles:

  1. A merchant account is underwritten by a financial institution so expect to provide financial documentation pertaining to your business.
  2. A merchant account allows your business to accept payments via credit card.
  3. A merchant account is treated like a line of credit. Money received from your customers is deposited immediately into your account, however that money be charged back for up to 18 month from the original sale. This creates a line-of-credit in the eyes of the funding bank.

What kinds of merchant accounts are available? There are many different merchant accounts that are offered depending on how your business intends on accepting credit cards. The 4 major account categories are:

  1. A retail merchant account
  2. A Mail Order, Telephone order (MOTO) merchant account
  3. a internet merchant account
  4. A Point of Sale (POS) merchant account

How long does it take to set up a merchant account? A merchant account can be set up in as little as 24 hours or as long as 2 weeks. It depends on a few factors.

  1. Type of business
  2. Industry of the business
  3. Requested account volume
  4. Business Financials

What do I need to know when setting up an account? It is beneficial to understand all the rates and fees associated with the account, how they are charged and what they mean. It is also beneficial to understand that a lot of the charges associated with the account are negotiable.

Who should I use to set up the account? There are many options when selecting a provider.  Be sure to weigh the benefits and cost associated with each to make  the most informed decision for your business.

Tags: What is a Merchant Account, Credit Card Processing Account, MOTO Account, Credit Card Processing Fees, Point of sale credit card processing

What is a merchant account?

Posted by Alex Neir on Mon, February 07, 2011 @ 05:12 PM
What is a merchant account

What is a merchant account?

A merchant account is a financial vehicle that lets you accept payments from someone else. The three important factors to understand about a merchant account are as follows:

A merchant account is….

  • Underwritten by a financial institution
  • Allows you to accept payments
  • Is a line of credit

A merchant account is underwritten by any number of financial institutions. Most major banks have the capability to set up a merchant account. However, most banks will actually refer the account to a licensed merchant service provider (MSP) or independent sales office (ISO). The reason; most banks see their core competency outside the merchant services area and will refer your business to an expert (for a commission, of course). An MSP/ISO is an institution that establishes relationships with a network of credit card issuing banks and credit card associations (Visa, Master Card, AMEX, etc) for the purpose of processing payments. In addition most MSP/ISO organizations offer many other services such as fraud detection, fund remittance, detailed reporting and customer service.

A merchant account allows you or your business to accept payments. Payment acceptance can be in the form of credit and debit card payments, automated clearing house (ACH) payments, and electronic check payments.

A merchant account is a line of credit. The reason a merchant account is a line of credit is a function of the liability that charge backs create.

If you are considering opening a merchant account please refer to – 7 items to consider with an affordable merchant account.

*Image provided by Andres Rueda

Tags: What is a Merchant Account, Why Is A Merchant Account A Line Of Credit, Chargebacks