What Is a Merchant Account?

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When starting out with any new business endeavor, there is always a laundry list of different business services you have to plan out. Among those services, you probably have heard about the need to set up a merchant account. The question is: what is a merchant account?

The most basic answer to this question is simple: a merchant account allows businesses to accept credit cards as payment. Of course, like most aspects of business, merchant accounts go beyond just accepting credit card information and include things such as security protocols and encryption to ensure that this information is secure. Furthermore, this account acts as a sort of intermediary for these transactions to travel through before being deposited, usually into your company’s checking account.

How is it Different than PayPal?

PayPal is a unique feature and its utility for entrepreneurs and online traders is without question. Still, it has some key differences when compared against merchant accounts, especially when you consider using it in any significant business endeavor. Some of the key differences from what a merchant account is include:

  • Payment Gateways: Payment gateways are what you actually use to accept the credit cards from your clients. With PayPal, you automatically have a payment gateway, but users must go through PayPal. For a merchant account, you set up separate payment gateways.
  • Phone Support: PayPal does not offer daily phone support for your needs. Instead, merchant accounts offer easy access to phone support should any issues arise. This makes it easier to operate and work through daily problems.
  • Payment Transfers: With PayPal, money is sent to your PayPal account and then you must manually select a method of transfer. With merchant accounts, the money is sent directly to your bank account.
  • Fees: One of the major differences and one reason that self-employed individuals use PayPal is the lack of a variety of fees. On the other hand, the transaction fees associated with PayPal are typically much higher than those found on merchant accounts.

What Issues Can You Expect from the effect of what a merchant account is?

Some of the challenges that businesses encounter when looking to set up merchant accounts are financially based. Unlike large businesses that can absorb the costs, many small- and medium-sized businesses have difficulty dealing with the variety of fees of what a merchant account is offering. Another common issue occurs for businesses that are classified as high-risk, which can raise the fees and even make it difficult to qualify for an account.

Overall, the key to avoiding issues is to perform as much research as you can ahead of time. If you work with the right merchant account provider, you will find that the process can run smoothly and you can accept credit card payments without hassle. Should you run into issues, contact your account provider and they should be able to work with you to guide you through the process.

Setting up Merchant Accounts

When it comes time to sign up for a merchant account, submit all of the necessary information to your chosen provider and wait for a response. Within 48 hours, you will have a response and get some ideas about what to expect. If you have any questions about what a merchant account is and what it needs to start running, contact a representative at Transparent today to learn more about your options.