A business that accepts any form of card payment, be it credit or debit card needs to have a merchant account. So, what exactly is a merchant account, and why does your business need one?
What Is a Merchant Account?
A merchant account is a type of business bank account that is essential to start accepting online payments. This means you need one to securely accept and process any form of electronic payment – such as card payments, bank transfers, digital wallets, e-invoices, etc. You open a merchant account via a payment service provider or an acquiring bank. With this account, you can accept any type of electronic payment and in different currencies. When you work with a third-party payment service provider, you do not need to open a separate account. Instead, you become a ‘sub merchant’ – this means you can use an account of your PSP instead. When you use your PSP’s merchant account, you have to pay a transaction fee.
Benefits of merchant accounts
- Merchant accounts offer your business an array of services. These can include digital invoicing, setting recurring billing, sending and receiving any kind of online payment, and monitoring cash inflow and outflow.
- Unlike checks, digital payments take less time to process and settle. Hence, having a merchant account enables you to receive your payments more quickly. Better cash flow means more opportunities for your business.
- You can offer a wide range of digital payment methods when you opt for an account. This helps you offer more flexibility to buyers, and they will love you for it. Offering multiple payment methods helps you deliver greater customer satisfaction while improving brand experience and loyalty.
Why Does a Business Need a Merchant Account?
A merchant account is an invaluable addition to your business because it allows you to send and receive instant payments easily. No matter what kind of business you run, a merchant account allows you to accept payments instantly in multiple ways. This becomes necessary for a high-risk business in order to protect it from frauds, refund scams, and chargebacks. At the same time, it becomes necessary for any business that wishes to scale itself and move from cash or check payments to card payments or other forms of electronic payments.
Key reasons why a business needs a merchant account are:
- Helps a business offer strong data security to customers.
- Avail advanced technology for detecting frauds and scams.
- Offer a hassle-free payment experience to customers.
- Merchant account services can be linked with your point-of-sale terminals as well, thus allowing a single payment solution for different payment methods.
- You save up on different transaction fees and subscription costs under an integrated merchant account.
How To Choose a Merchant Account?
Merchant account services help a business enhance its payments, increase revenues, and manage finances more efficiently. Real-time monitoring of revenues along with better data consolidation makes merchant accounts a crucial tool for businesses, both large and small. Merchant accounts offered by a payment service provider like Novalnet give you flexibility and clarity. Based on your business needs you can opt for an aggregator merchant account or a single merchant account (ISO merchant account). Single merchant accounts are dedicated accounts where you have full control and faster settlement. You can also customize it based on your business needs.
For most businesses accepting online payments, a single merchant account is not necessary. It can also be expensive and takes longer to get approved.
Instead, you can work with an aggregated account. This is especially true for new businesses with little or no credit history. Usually, payment gateways are equipped with an automated aggregate account and it is the simplest way for a new business to include a merchant account. Businesses that want to accept online payments directly and have high volume transactions opt for a dedicated or single merchant account.
How can Novalnet Help?
As a PCI DSS compliant payment service provider, we make payments simpler for all businesses. Whether accepting payments in different currencies or operating in a fully compliant and secure environment, our merchant account services are available for businesses of all sizes and scopes. We ensure that your payment needs are processed in a secure, stable, and scalable way. Our technology helps Europe’s leading brands to accept payments globally in 125+ currencies in 150+ automated country-specific payment methods. We help you set up your payments within minutes with minimal coding using our instant payment plug-ins. While our AI-based risk management solutions help you design the safest and best payment experiences for your customers.
Reach out to us today to know more.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.