If you run a small to medium-sized business, you make up more than 90% of the US business population. That also means you're essential for creating economic growth (go you!)
As you scale your business up, you need to handle a wider variety of payments from your customers — without the right tools, you could miss out on countless sales.
That's why you need a merchant account. And in this quick guide, you'll learn everything you need to know about them. We'll cover:
- What merchant account processing is
- What merchant accounts are used for
- Which merchant account provider you should choose
- What the costs of merchant accounts are
- What you need to set up a merchant account
What is merchant account processing?
A merchant account is a business bank account that lets your company accept credit card payments (and debit cards with PINs). A processor (also called a payment gateway or merchant service provider) allows merchants to accept credit cards. They do this by converting the merchant's information into something that credit card companies understand.
Processors will charge you processing fees for each transaction — your merchant account provider might charge as well. Each merchant account provider sets its own prices, so it's essential to shop around for merchant services to get the best deal.
What are merchant accounts used for?
Merchant accounts are typically used by businesses that sell their own products or services. Still, you can use merchant accounts to collect donations, receive payment for your work (through freelance websites), accept credit card payments from subscribers, or even sell items on auction sites like eBay.
With a merchant account, your company becomes an official merchant of record — meaning that it's now a legal business and can process credit card payments. Once processing is in place, you don't have to worry about anything else — merchant service providers will take care of everything for you!