10 Things You Should Know About Opening a Merchant Bank Account

Are you one of the thousands of new business owners, or well-established ones, who needs to get a merchant bank account? Maybe you’re tired of telling customers that they have to pay via cash or check. Or, perhaps you simply want to accept various types of credit and debit cards quickly and efficiently.

If that’s the case, then it’s time to get a merchant account. The benefits are numerous and the process is relatively hassle-free as long as you work with a reliable provider of merchant services. Sometimes you’ll hear the term, “commercial bank account,” because that’s essentially what a merchant account is. But, there’s more to it than that.

Take time to understand the benefits of merchant accounts, review the ten key facts about them, and then decide how to proceed.

Why Merchant Accounts Make Sense

About 62 percent of all online payments are done with debit or credit cards. Other payment methods account for the rest. That means things like Google Pay, PayPal, and similar processes. All in all, companies that don’t have merchant accounts miss out on a lot of sales. Here are the most common benefits of having a merchant account:

  • No more returned checks: If you’re tired of paying fees on returned checks, a merchant account can solve that problem by offering electronic alternatives to buyers, from instant debit/withdrawal to recurring ACH payments.
  • Your customers will be happier: Consumers like to have options. So, when you offer them the ability to pay in person with debit and credit cards, payment apps, checks, and cash cards, they’ll come back and buy from you again. The goal of every merchant is to make the payment process as fast as seamless as possible.
  • You’ll sell more: It’s a fact: sellers who take credit cards enjoy higher sales volumes compared to those who only accept cash and checks. There are lots of reasons for this phenomenon, the most obvious one being that consumers are more apt to spend more when they use a plastic card as opposed to cold, hard cash. Use yourself as an example: How often do you carry more than $50 in cash with you? If you need to buy an item at the hardware store that costs $150, and the store only accepts cash, what would you do? Most people would simply head to a store that accepts debit and credit cards.
  • Budgeting is easier: It’s hard to secure, account for, and track cash. But, when you have a merchant account and are able to take credit cards, you get detailed monthly statements about goods sold, exact time of sales, repeat customer information, and more. When you sit down to prepare short-term and long-range budgets, those statements come in very handy.

10 Things You Must Know About Merchant Accounts

If you want to set up a merchant account in order to accept more forms of payment from customers, here are 10 key facts that will help you get started:

  1. It only takes one business day to get started: Even though there’s a lot that goes into setting up a merchant account, most companies can get everything done and be ready to go within one or two business days. Just be sure you have all the documentation in hand before you begin.
  2. There are different fee levels and processing time-frames: Depending how quickly you want your payment processing done and how large your monthly volume is, fees will vary.
  3. You can accept plastic and ACH payments: Sometimes it’s necessary to have two merchant accounts if you want to accept credit/debit cards with one and ACH payments with the other. ACH, which stands for automated clearing house, is a direct, bank-to-bank money transfer. It’s very fast and eliminates some of the problems that come with standard plastic payments. Check with your payment provider service to see how to accept both kinds of payment without having to establish multiple merchant accounts.
  4. Business licenses are almost always necessary: Anymore, it’s pretty much a necessity to have a business license in hand before attempting to set up a merchant account. Those are the licenses issued by the state in which your company is registered. If you don’t have a license, many banks won’t even consider your application, so be certain to obtain a valid business license in your home state first.
  5. Underwriting is a core part of the process: There is an underwriting process for setting up merchant accounts, but it’s relatively quick and painless. Financial institutions and processors need to make sure that the companies they do business with are valid entities that are licensed to conduct transactions with consumers. Additionally, payment providers do underwriting to minimize their own risk.
  6. It’s important to be PCI compliant: You can get a merchant account without being PCI compliant, but eventually you’ll have to maintain the security and data-protection protocols that is part of the PCI compliance agreement. The entire arrangement is designed to protect both your customers and your business from fraud, hackers, and data breaches.
  7. Online and physical stores can use the same merchant account: One of the main advantages of having a merchant account is that you can conduct both online and in-person business under the same financial account “umbrella.” There’s no need to have two accounts. This makes sense because so many merchants operate both physical stores as well as e-commerce websites where they sell goods and services.
  8. You need to verify your sales volume: Be careful to provide accurate sales volume data when you apply for a merchant account. It’s okay if the number is an estimate, but offer the bank or payment processor your backup statistics so they can have a clear picture of the amount of business you do in a typical month.
  9. It’s possible to apply online: Establishing a merchant account might involve a lot of documentation and verification of data, but the good news is that it’s not only a fast process but can be done entirely online. For today’s busy entrepreneurs, that means not having to leave the comfort of the office to get everything done.
  10. A business bank account is required: It’s a necessity to have an official “business” bank account before getting started with the creation of a merchant account. Even if you used your personal bank account during the first few days after opening the doors of the company, you need to have a valid business account as step-one for obtaining a merchant account.

Doing Business in the Era of COVID-19

Since March of 2020, the entire world economy has been changing. One of the key differences between the pre-COVID and post-COVID era is how consumers prefer to pay for goods and services. With each passing month, there’s more of a demand for contactless payment and online credit payment. Companies that don’t have merchant accounts run the risk of being left out of the cashless wave that has already begun.

Open Your Merchant Account Today

There are dozens of reasons for small, medium, and large businesses to establish merchant accounts as soon as they can. At Metro Payment Technologies, our team has an inherent understanding about how to set up and maintain the right kinds of payment solutions for companies of all sizes.

When you’re ready to get moving and get serious about increasing sales volume just by having the right kind of payment services, give us a call at our toll-free number, 1-800-771-3719, or contact us through our website. We have a full menu of e-commerce and payment solutions for companies that are ready to move seamlessly into the digital, cashless payment era.