A merchant account or merchant service is basically a service or a bank account for your business, where you can securely accept credit, debit, or another online form of payments within your company.
Many people view merchant services as added convenience while doing business. Using a merchant service comes with many benefits to your business. But, it also comes with some risks that you might not know.
Getting started with a merchant account might sound intimidating if you are unaware of the right merchant account provider. Make sure you are well informed about different merchant services. You could also see the reviews of various service providers or see comprehensive chase merchant service reviews to stay well informed about your merchant service provider.
Benefits of a Merchant Account
1. Accept Credit Cards
One of the main benefits of using a merchant account is accepting credit and debit cards. Currently, cash is basically dead; most people use credit or debit cards or other forms of digital payment. Adding in a new payment method also increases your store’s revenue, as not everyone carries cash with them. The average cash transaction is just $22, whereas the average non-cash trade stands at $112. Your ability to accept debit and credit cards automatically helps you be accessible to a broader range of customers.
2. Better Money Management
Accepting credit cards does not just mean you increase your sales and revenue; it also improves how your business handles transactions. The record of the transactions is now electrically stored instead of manually counting cash. The electronic payment system allows you to keep the cash flow managed and organized.
3. Customer Convenience
Customer satisfaction is the key to any business. A merchant account keeps your customers satisfied with the flexibility of payment methods. Online payments with cards or mobile payments are very convenient, and your customer will enjoy the experience rather than counting every penny while paying. A merchant account aids in customer convenience and helps the customers shop with ease. Keep your customers satisfied with the freedom and flexibility in their shopping experience.
Drawbacks/Risks of Merchant Services
1. Settlement Period
Your payment may not reach you directly after the customer pays. Usually, payment processing companies or merchant service providers might hold money for a settlement period of around 30-60 days before you receive the money. It might be the main downside of using a payment-processing company.
2. Higher Cost
Having a merchant account might cost you a little more than a traditional bank account. Also, while accepting credit cards, there comes a specific cost for every transaction. You can also count the cost as an operational cost or a cost of doing business. You may also need a minimum net worth or a strong credit profile to have a good merchant service that isn’t just there to rip you off.
While going with a merchant service provider, make sure you are well informed about the benefits and risks associated with merchant services or even their disadvantages. So, be well aware of what you are going for and consult an expert or someone with a similar experience before getting yourself into it.