How to open a merchant account: a guide to get started fast
What is the integral part of each online business, aside from qualitative products or services and purchasers, of course? Probably, it’s the ability for your purchasers to pay with cards and for you to accept online payments. To provide customers with this functionality, merchants must enter into an agreement with a bank and open a merchant account. This is not always a quick and easy procedure, but we’ve collected the basic tips to facilitate this process for you.
What’s a merchant account?
It’s a special type of bank account that enables merchants to accept online payments. In fact, a merchant account is an agreement between an online store and an acquiring bank that enables a financial institution to process customers’ non-cash payments. The scheme of money movement is as follows:
Step 1. The money is debited from a client’s card =>
Step 2. A payment gateway processes the transaction =>
Step 3. The funds go to the merchant’s bank account =>
Step 4. The merchant receives funds to its bank account (usually within 1–2 days).
Why is the scheme of settlement so complicated? Let’s figure out why the funds go to a merchant account but not to a commercial one at once.
Unfortunately, the sales process is not always smooth. Sometimes, customers may request a refund because the product they bought did not fit. Or the funds from their card were debited as a result of fraudulent transactions. In such cases, the money is withdrawn from the merchant account, and the remaining sum is withdrawn to the bank account. That is why opening a merchant account is the priority if you decide to win the world of e-commerce.
Benefits of having a merchant account
Despite being quite a palaver, having a merchant account has tons of benefits for your online business.
- Transaction speed. It doesn’t matter what the current turnover of your online business is. The ability to perform hundreds or thousands of transactions per minute opens up incredible prospects for increasing your income in the future.
- Multicurrency. Having a merchant account allows you to accept payments in various currencies. Thus, the expansion of your business is just a matter of time.