If you want to process credit card transactions or purchases through your point of sale system, you need a merchant account. One of the biggest benefits of using merchant account services is that the risk taken while processing payments passes from you to your merchant account provider. You are simply paying a fee to shift some of the stress onto someone else’s shoulders.
Look at it this way, with every payment you make there is a risk that your customer will never actually pay. They might not pay their credit card bills that month, or they might charge their account, meaning your payment would bounce back.
If you don’t have a merchant account, you will never be able to see the funds, even if you have already delivered the requested product or service. At the very least, you could find yourself waiting indefinitely for a payment you have processed with your card reader or payment service.
With merchant accounts, you can eliminate this risk. Merchant accounts give you the funds you need directly from processed transactions. This means that it is the merchant service provider who has to deal with the headaches if something goes wrong. You don’t even have to worry about waiting for your income to appear. To enhance your payment processing solution, merchant accounts allow you to quickly generate revenue for your store. However, the benefits of merchant accounts come at a price. Account providers will need to fortify themselves against the risk they are taking on your behalf. This means that you pay additional fees to access your service.
Merchant account fees
Merchant accounts have a few fees to consider. The amount you pay for things like setup and transaction fees will depend on the account providers you work with. Here, we’ll walk you through some of the basic expenses, so you know what to expect when budgeting.
Merchant account companies often charge small business owners an upfront fee to get everything ready for them. Unfortunately, most vendors here will only provide prices based on quotes. This means that you may need to ask for a quote before you have an idea of what you are going to pay.
Your setup fee will depend on things like what type of business bank account you have, whether you use POS hardware, and more. Some vendors also base setup fees on things like monthly or annual sales volume.
In addition to the setup fee, some companies will charge your ongoing fees for high risk merchant services. This is usually the case if you access a range of tools with your merchant services, such as reports. Typically, the maintenance fee is a fixed cost that comes once a month. They are separate from your transaction fees.
Transaction fees are probably one of the biggest additional costs you will need to consider when setting up your merchant account. The transaction fees that you need to pay depend on factors such as the type of business you operate and the card and payment processors you need to use.