For most businesses, it is essential to have a merchant account for economic growth. Aside from being commonly referred to simply as credit card or payment processing, merchant accounts also provide business owners with a way to accept credit and/or debit cards, gift cards and other forms of electronic payments. As a general rule, if they wish to accept electronic payments, then any merchant who accepts payment in exchange for goods or services must apply for a merchant account. Surprisingly, however, not everyone is approved for merchant accounts. One example of a potential problem could be a business owner who has little or no credit or even a poor credit history may find it difficult to obtain a merchant account.
For many online entrepreneurs, PayPal has revolutionized the way people do business. Allowing you to instantly send or receive payments using a credit card or checking account is an online payment system but for PayPal, users are not required to have a merchant account and they do need to perform a credit check before they issue an account. In a nutshell, anyone with any type of credit history can sign up for a PayPal account and begin accepting electronic payments within minutes.
You will find that there are fees that accompany each credit card payment if you are one of those who do not use the Internet but need merchant accounts for in-store payment processing. Even though the actual cost is different among providers, the fees are always present. Among the common fees charged include transaction, authorization, statement, monthly minimum and chargeback fees. If the business owner process a credit card payment that is ultimately denied for any reason, then a chargeback fee is automatically charged to them. In this scenario, in order to compensate the business for its cost, the business owner would then be responsible for having their customer pay the chargeback fee.
In order to apply for these types of accounts, business owners must be able to provide a valid business license, description of the company, business location and other verifiable information used to perform a credit check on the owner. The bank will issue a credit card terminal and/or other equipment upon approval that will be used to process payments. Depending on the terms of the agreement, the equipment may or may not remain the property of the issuing bank.
When deciding where to apply for merchant accounts, business owners should consider starting at the bank where they already have a personal account. Aside from enabling them to do business with a bank that they are already familiar with, they may also find that their past responsibility in handling their own account may carry substantial weight when applying for merchant accounts from the same institution.