What is a merchant account? How does it work? What types of merchant accounts are there, and is there a best kind of merchant account? Let’s start with the basics:

What is a Merchant Account?

Let’s say you make a sale to a customer who uses a credit or debit card. This goes through to a bank account that’s used to hold those funds. Think of it as a waiting room where funds go when they leave a customer’s credit card. Just like people waiting at the doctor’s office get called in for their appointment, at some point the funds will be called upon and move over to the merchant’s standard bank account.

Getting a Merchant Account

Getting a merchant account is fairly easy. Any business can open a merchant account. Make sure the service you choose is safe, and they can walk you through the basics.

There are third-party choices that process payments, but they can charge higher rates – consider how Paypal works, for instance. As a merchant, it’s usually more profitable to open a more standard version.

Types of Merchant Accounts

The best kind is one you have with a “full service” merchant account processor. A merchant account processor should provide you all the things you need, including training and integration with your current technology. They may even provide you customized reporting. These are perks, so let’s return to basics.

A good processor should handle pretty much everything from start to finish. They’ll have an established relationship with a Payment Gateway that checks the customer’s card for funds and authorizes the purchase. They’ll have fraud and chargeback protection to notify you of any chargeback claims.

All of this happens in real-time so that you can reliably provide credit and debit card processing to your customers. This process should be entirely automated so that you can expect the same result every time, and it should be reportable so that you can audit the process yourself and keep it for your own records. A merchant account makes you more powerful and flexible as a business.

Want more information on merchant accounts? Contact Y2Payments today to learn about our services.