Merchant Accounts

Merchant account is an agreement that you have with a bank that has agreed to allow you to charge people's credit card, while they honor it and deposit the funds into your account. The bank is responsible, via the issued merchant account, for debiting the funds from the customer and depositing it into your account. There is usually a processor that is involved that processes the credit cards for the bank and lets them known the funds are available. When you are given a merchant account from a bank, they are relying on you to uphold your promises to your customers by delivering the products and/or services to them in a timely manner.

There are two choices to choose from. You can have the power of owning your own merchant account, or you can use another company's merchant account for a fee. Each method is explained below along with the advantages and disadvantages of each. You need to decide which method is better for your business after reading the material. However, getting your own merchant as you have more power and flexibility.

The first method is using another company's merchant account. There are many companies available online that allow you to accept credit cards using their merchant account. This service allows you to charge customer's credit cards without owning a merchant account nor having to pay the fees involved for owning one. Most services in this nature, require you to sell only tangible items and their rates for the service range about 9% - 11% of each sale. Some companies may charge a setup fee to get a merchant account started with them.
However, the disadvantages are higher percentage fee, less control over sales, refunds and charge backs,- Much longer wait to access your money, limited to only tangible items and the complexity of going through another company. Also you must use their shopping cart system.

The other method is finding an online merchant service to supply you with a merchant account. Generally, most providers will have a partnership with their sponsored bank or they might just be the bank. Depending on what type of processing method you choose, most merchant providers available are resellers for real time processing systems such as Eproccessing network. In most cases, your merchant provider will set you up with their sponsored bank, and a real time processor if you choose that type of processing method. Having your own merchant account is the best way to go for all businesses, even retail. The advantages can be lower credit card percentage fee, fees refundable on returns,less expensive on higher volume sites, much shorter wait time for money, ability to use own ordering system, able to sell any kind of product/services, More control over sales, refunds & charge-backs. Some of the disadvantages may be a small startup fee, monthly fees.



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