Find out What Your Small Business Can Gain from Opening a Merchant Account


Whether your small business is a time honored mainstay or just getting its feet on the ground, chances are you’ve heard of the benefits of opening a merchant account. Merchant accounts offer the convenience of processing credit and debit cards for payments—a service which is often taken for granted in today’s fast paced marketplace.

Merchant accounts are excellent options for most any type of business, from service providers like plumbers and exterminators to restaurants and cafes to grocery stores and boutiques. Providing a fast, simple and secure way of paying without cash makes it easier for your customers to enjoy your goods and services and will lead to an ever expanding base of happy consumers.

Before you jump into the sea of credit card processing, however, it’s a good idea to get your business’s feet wet with the basics of how merchant accounts work. Take a few moments to get the lowdown on merchant accounts now with this quick overview.

Merchant Account Providers

Although merchant accounts can only be legally offered by specialized merchant banks, many companies, called independent sales organizations, or ISO’s, provide a range of helpful services and act as a third party between businesses and banks.

ISO’s can vary greatly when it comes to services offered, contract terms and fees. It makes sense to conduct a thorough and patient search before you decide upon the ISO that’s right for your business. Any company offering merchant services should be able to promptly provide proof of sponsorship by an FDIC-insured banking institution.

Basic Types of Merchants Accounts

For many years, the two types of merchant accounts available to businesses were only retail and mail order-telephone order, or MOTO, accounts. With the advent and prevalence of the Internet and its many subsequent web-based businesses, Internet accounts have joined them. The main mode of business you offer will determine which type of merchant account is best for you.

* Retail Merchant Accounts – Retail merchant accounts are the best option for businesses who offer a physical storefront or point of purchase. They are considered the most secure type of transaction since at least 80% of all card processing must be done instantly with the card holder present. These accounts offer the least expensive rates per transaction but require the purchase or leasing of a credit card processing terminal from your account provider.
* MOTO Accounts – The main advantage MOTO merchant accounts offer is the ability to process credit cards on a deferred basis. Businesses are supplied card information by customers and later provide this information to account providers via the Internet or telephone. This is considered a higher risk process than other types and also comes with the highest transaction fees.
* Internet Accounts – Internet merchant accounts are rapidly becoming some of the most popular as they accommodate the rising number of businesses who conduct payment processing on the web. This service can use a custom designed payment portal or, more often, take advantage of third party payment gateways to let customers shop at their leisure, adding items to a virtual shopping cart and pay securely by entering card and billing information when they’re ready.

Extra Services

Merchant accounts and the ISO’s who provide them continue to offer an expanding array of services to suit the needs of small businesses.

* ATM and e-check processing – For businesses that do a lot of business via the web, it can be helpful to offer the convenience of payment by ATM card or e-check. While ATM cards can be processed the same way as a credit card, e-checks let merchants withdraw payments from a customer’s bank account using their routing and account numbers. E-checks can be printed physically with the help of specialized software or can be verified and processed using a third party service provider.
* Escrow services – Escrow services can be especially helpful to certain types of businesses that deal with major transactions such as real estate or those who need a third party liaison, such as auction houses. ISO’s who provide escrow services can hold deposits for large purchases or help ensure customer satisfaction by withholding payments until the good or service has been rendered to their specifications.
* Mobile credit processing – For businesses who often offer their services or goods while on the road, many ISO’s offer the ability to process payments remotely. This can be accomplished with the help of a specialized mobile processing terminal or a regular cell phone and works anywhere cell service is available.

Add an extra dose a convenience to your customers’ lives with a merchant account today. Their many benefits provide a secure and simple way to process payments and are sure to keep your growing pool of patrons coming back again and again.