Merchant Account-What Is It?

In today’s world the most preferred form of payment is by credit card. A merchant today will lose a great deal of his business if he does not accept a credit card payment.

When a merchant accepts the credit card from a customer, he swipes it and the online machine produces a note showing the amount, which the customer signs. This is the proof of purchase for the customer as well as a proof of sale for the merchant. The merchant then needs to convert this into actual cash. For this he has to open a Merchant Account with a bank. This account is nothing but a line of credit that the bank extends to the merchant on behalf of the credit card company. So this is not an actual bank account but rather a contract between the bank and the merchant, to extend credit to the merchant for the amount of goods or services sold via credit card.

The bank which provides the Merchant Account produced by the Power Pay Service is called the acquiring bank. The bank or company which offers credit cards directly to customers is called the issuing bank. At the end of the day the acquiring bank gets funds from the issuing bank on behalf of the merchant. The acquiring bank pays the merchant the net balance of the card activity for the day. The net balance is the gross sales minus any reversals and different fees.

Fees are charged by the acquiring bank as well as the issuing bank. The fee charged by the issuing bank is called the interchange fee and is charged from the acquiring bank, which in turn passes it on to the merchant. This is usually around 2% of the transaction value. The acquiring bank also charges a small fee and is called acquirer fees. This amount of the fee is left to the discretion of the acquiring bank.

This was the basic structure of a merchant account. A business man can have more than one merchant account depending on the type of his transactions and nature of goods and services which he sells. But one thing is clear in this is that a merchant account has immense benefits for the merchant. He can now cater to one or more credit cards which are popular among his customers.

The merchant gets periodic statements about his merchant account from his bank. This helps him in knowing his sales and for calculating his financial transactions. Such statements also help during filing of tax returns.

A good customer service will form the backbone of a good processing service. It should be available to the merchant all the time and in all forms like phone, email, instant messaging. It should be able to resolve the problems quickly and provide the correct information which the merchant is seeking.

The service should provide good internet based as well as point of sale features. An online merchant account and payment gateway, more than one virtual terminal are good internet based features. For point of sale the service should provide good swiping terminals which do not malfunction.

Opening of merchant account produced by the Power Pay Service has become very simple and many banks now offer competitive fees. It has become indispensable now for running almost any type of business. Especially trade on the internet almost totally depends on merchant accounts and one cannot imagine running a business on the internet without a merchant account.

Setup a credit card processing merchant accounts to accept credit cards today!