7 Benefits of a Merchant Account
Today, businesses need to accept more than cash, checks, or a customer's debit card. Even credit card payments are getting left behind with the seamless processing of ACH and bank-to-bank transfers. But to leverage these options, a small business owner needs to invest in a merchant account.
As a business bank account, your merchant account makes it a cinch for organizations to process just about every payment option. While the idea of forking out more dough for a payment solution is challenging at first, it's clear that investing in a merchant service can result in higher revenue.
But before we get to the benefits—like better cash flow, secure payment processing, and trackable income—let's talk about why every serious business should have a merchant account.
First: Does a Business Need a Merchant Account?
If you want to accept more than cash or check payments made to your personal account—yes.
The problem with sticking to simple payment methods such as cash or using personal accounts are plenty:
- Limited customers
- Friction payment experience
- Confused accounts
- Unclear cash flow
- Time-consuming reporting and bookkeeping process
- Lack of customer trust
A merchant account can solve all of these challenges—and more.
Are You Saying There Are No Alternatives?
If you’re a really low-volume business, PayPal, Stripe, and Square are the closest you can get to alternatives. But they lack many of the features dedicated merchant accounts need. And they may become expensive as you grow.
7 Benefits of a Merchant Account
- Boost Revenue
There are a few different ways a merchant account can improve your revenue stream -from boosting customer trust and providing a streamlined payment experience. But for most businesses, the “quick win” here is the ability to add different payment methods.
When you open up payment options to credit cards, debit cards, ACH, and bank transfers, you make it easier for customers to say “Yes” when shopping with you. As a result, you capture more purchases from more customers.
At the same time, adding a merchant account can add legitimacy and accountability to the operation. After all, if a payment gateway trusts you and accepts traceable purchases, you’re more likely to deliver. Or, in the worst-case scenario, they can get a refund.
- Improve Customer Satisfaction
Customers may not always have cash on them or a credit card. And for consumers buying your goods online, having multiple payment options make payment more convenient.
But depending on your merchant portal, you may have additional ways to boost the customer experience, such as:
- Customized invoices or payment portals
- The ability to save payments
- Partial payment options
- Take Advance of Enhanced Business Services
Unlike personal accounts, a business merchant account generally offers several business-specific features that make accounting easier. These can be:
- Invoices and invoice automation
- Collection Automation
- Payment portals
- Enhanced analytics
- Point-of-Sale options
- ERP or accounting software integrations
- Payment Security
- Automated and verified receipts
- Recurring payment options
- Build Credibility
Seamless payment portals and branded payment gateways look professional. A simple but well-designed presentation builds consumer trust in your brand.
- Process Payments Securely and Swiftly
You know, and we know that the faster money comes in, the better for your overall cash flow. At the same time, online payments should be made securely. And with fraud rising and the cost of data breaches increasing, the security aspect is essential.
Choosing a merchant account that guarantees PCI DSS compliance is half the battle. But you should also consider how your provider complies with their security measures. Cybersecurity should be taken seriously when you consider that consumers are far more likely to experience fraud online and that 47% of companies experience fraud in a two-year period.
At Paystand, all transactions and payment information are tokenized. Even if the information is saved, the actual credit card numbers, names, and personal details aren’t in the system.
- Maintain Accurate Accounts
Merchant accounts make keeping your books clean and easy to read simple. Whether you integrate with your ERP or accounting software or use the merchant account as is, you’ll see a clear record of transactions. This can be used both in forecasting and when prepping for tax season.
- Gain Insight into Your Cash Flow
In line with keeping accurate and clean accounts, this allows for insight into your cash flow-potentially in real-time. In addition, many online merchant accounts also provide their own set of enhanced analytics on items like Day Sales Outstanding (DSO), turnover ratio, collection effectiveness index (CEI), and more. And that’s just for accounts receivable.
What Is the Cost of a Merchant Account?
The actual investment you’ll be putting into your merchant account depends on your provider and the number of services you need. Generally, there are a few different methods of paying for your merchant account:
- Flat fees - this is usually the best method. You always know what to expect, and increases, even if based on volume, tend to be marginal.
- Interchange-plus - In this case, the provider will often add a specific amount on top of the interchange processing fees. This can be a percentage or a flat cent rate.
- Tiered pricing - Finally, with a tiered system, types of transactions are sorted into categories, and each transaction type costs a certain amount. For example, a POS transaction with a credit card present might cost less than an online transaction.
Depending on your provider, you may also be subject to additional fees as well:
- Gateway fees
- PCI compliance fees
- Address verification service fees
- Statement fees
- Chargeback fees
- Early termination fees
- Cross-border fees
What are the Types of Merchant Accounts?
As you can imagine, there are many types of accounts. Which merchant services you should go with often is determined by your business type and the specific payment solution. Consider these main merchant services categories:
- Retail Merchant This type of provider is ideal for local, fixed-location retail businesses.
- Ecommerce Merchant If you’re interested in accepting payments online or via phone, an eCommerce merchant can help.
- Mobile Merchant - For those that intend to accept mobile payments, you may want a mobile-specific merchant account.
- Mail Order Merchant You can also choose to accept payments via mail.
- High-Risk Merchant - This provider specializes in businesses with a high return or chargeback rate.
Drive Revenue with Paystand
Considered the Venmo of B2B transactions, Paystand is a flat fee-based payment solution that goes above and beyond your regular merchant account in terms of usability and features.
Our accounts receivable platforms integrate with all major ERPs and provide clients with the following:
- A seamless customer-centric payment portal
- Access to our bank network for transfers
- Ability to set convenience or “zero-fee” payment options
- Collection automation sequences
- Advanced analytics
- Notarized receipts
- eCheck, ACH, and smart lockbox options
- Tokenization for information security
As a result, our users have seen a 60% decrease in DSO and saved up to 50% on the cost of receiving payments.
To learn more about how easy Paystand is to use and how it can benefit your business, experience a customized demo.