Did you recently start a business and struggle to find the most convenient ways to get paid through customers? Creating a merchant account from a renowned merchant account service offers you a myriad of benefits and enables your customers to engage with frictionless payment methods.
However, before creating a merchant account, it’s vital to understand what a merchant account is. In this blog, Unity Payments will allow you to perform an in-depth analysis of merchant accounts and which type should you choose according to your industry.
What Is a Merchant Account?
A merchant account is an intermediary connection between a customer’s and a business’s bank account. These accounts enable electronic payments, including debit and credit cards. Additionally, it’s an effective part of the payment procedure and is utilized to register payables to businesses.
To exemplify, when a customer executes a payment, their fiscal amount is transferred to the merchant account that temporarily holds it until the entire payment process is complete. Once everything is settled, the funds are moved to the business bank account.
How Does A Merchant Account Work?
The electronic payment process is considered arduous. To begin with, when a customer purchases a product, their card information is sent securely from the checkout interface to the payment processor. This processor plays a vital role in inspecting the account for available money and confirming that the provided details conform with the information on file with the card issuer.
Subsequently, the card issuer verifies the transaction and provides the approval code through the network to the merchant acquiring bank. This step-by-step procedure executes the transfer of funds to the merchant’s account, enabling quick bank transactions without jeopardizing security measures.
Throughout this process, various fees are deducted—from processing fees to markups and interchange fees—ensuring that the merchant account services provider manages the associated risks effectively.
Do I Require a Merchant Account?
If you run a striving e-commerce store and accept payments from customers, you’ll likely require access to the facility of a merchant account. However, if your business functions on a marketplace or platform such as Amazon, you are not required to open a separate merchant account.
Different Types of Merchant Accounts
In order to cater to the broad spectrum of industries, several variations of traditional merchant accounts now exist; find the types below respectively:
Retail Merchant Account
These accounts assist small businesses with a physical location and require in-person payment processing solutions. This type of merchant account can supervise debit/credit card transactions at a POS (point of sale) along with mobile payment technologies.
Physical stores—whether new or popular- are renowned for being bustled with loyal customers and may be required to process large sales. For that exact purpose, retail accounts demonstrate an aptitude for quick credit card processing. These accounts seamlessly integrate on various POS software and devices, including cash registers, barcode scanners, and card readers. These accounts work best for retail stores, restaurants, supermarkets, and beauty salons.
Online Merchant Account
These merchant accounts are specifically designed for online businesses that sell digital services. These services include purchases made via online marketplaces, mobile shopping apps, etc. The Internet merchant account offers the facility of streamlined online credit card transactions through a payment gateway. In addition, an online merchant account ensures a secure transfer of funds and strives to swiftly identify any fraudulent behaviors.
One of the main differences between a regular merchant account and an online merchant account is transactional charges—online merchant charges are comparatively higher due to the involved risks in online transactions.
High-Risk Merchant Account
Some products or services lie in the category of “high risk” due to their volatile nature. Industries including Online Gambling, Pharmaceuticals, insurance, digital marketing services, and subscription businesses are considered high-risk accounts.
Similar to regular merchant accounts, high-risk merchant account services offer credit card processing, integrations with payment gateways, and diversified payment methods. However, they typically charge a higher monthly fee and/or per transaction fee to shelter the additional due diligence or security protocols.
Mobile Merchant Account
A mobile merchant account empowers businesses to accept debit and credit card payments directly through mobile devices like smartphones. Ideal for businesses frequently on the move—such as food trucks, farmers’ market vendors, and craft fair sellers—this setup enables seamless, flexible transactions anywhere.
Mobile merchant services, facilitated by a bank or payment processor, handle the backend of electronic payment processing, allowing businesses to receive payments effortlessly through mobile devices. Mobile merchant accounts are particularly beneficial for business owners attending trade shows and markets or setting up temporary pop-up shops.
Conclusion
By grasping the wisdom provided above, you can effortlessly gain the benefits of merchant account services and select the best one according to your industry. Keep in mind the monthly or transactional charges of every merchant account varies. Therefore, before collaborating with a merchant account management company, It is essential to have a meticulous discussion about charges for your peace of mind.
