Who Needs A Merchant Account?
As a small business owner, you’re probably wondering whether or not you need a merchant account to make your business more desirable to your customers. The answer is yes, but it isn’t that simple. There are different types of the merchant account, each with its own features and benefits. Your question shouldn’t be who needs a merchant account, but rather what kind of merchant account best meets your needs. The main categories are dedicated and aggregated/online accounts.
When Would One Need a Dedicated Merchant Account?
A dedicated merchant account is one in which there is no additional dealer service happening behind the scenes when a customer swipes their credit card at your terminal in the store. The payment is processed directly and sent to your dedicated account. Having a dedicated account means you won’t have nearly as much delay when processing a transaction, creating shorter and faster checkout lines checkout lines. This is the type of account you need to open if you have a high sales volume or the need for a more flexible payment and processing schedule.
One of the biggest selling points for opening a dedicated account is the ability to customize your rates. You can fine tune the payments and costs to make things more profitable for your company in the future. Typically, the higher your sales volume is, the easier it is to negotiate new terms with better rates for you. Talking to the company that provides you with the dedicated merchant account is the best way to ensure that you get the best rates possible.
For enterprises and individuals who need a steady cash flow but have a volatile inflow of funds, a dedicated merchant account gives you the freedom to set different time intervals for which payments are made into your actual bank account or business account. Opening a dedicated merchant account can be a tedious task, you have to submit your own and your company’s credit report for auditing. Bank records and personal information will be checked. If you don’t feel like you’re ready to make a long-term, full commitment to online payments and billing, then a dedicated merchant account isn’t the right choice for you just yet.
What About an Aggregated Account?
If you have just gotten started in the online payments game, you may be interested in an aggregated account.
Aggregated accounts are far easier to manage and set up. You can get approved for one if you have no credit history too. The service is typically free of monthly payment issues. You can get one of these even if you don’t have a company in the same country. The best part is that an aggregated account can be upgraded to a dedicated one should your sales numbers rise to the point that this change is deemed necessary.
Common aggregated merchant accounts on the internet include PayPal and Stripe. These are the easiest to work with because they have everything setup for you. Opening an account takes all of 2 minutes, and there is no application process to go through. Your business can be accepting payments made with credit cards in as little as half an hour if you do it properly.
Aggregated accounts like PayPal also offer various other features with their merchant account. This includes secure payments using the money in the aggregated account, switching over to a dedicated “Business” account when it is needed, and more.
As you can see, the question of “Who needs a merchant account” is answered simply with “any small business or startup that wants to process credit card payments.” The real issue here that you need to think about is what type of account you need for your business right now. Consider your sales and your goals and see if a dedicated account is worth the effort for you. If it isn’t, an aggregated account may be the best choice for your company.