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When is a
merchant account needed?
The growth of online business is
exponential. The growth of the ecommerce
movement is not taking place in drove,
but in legions. The main reason behind
the increasing growth of this is
obvious: the worldwide reach, the
market, and exploration of unchartered
territories. With several people using
the internet, a merchant business only
gets better by setting up an online
shop. However, for this to happen, a
person will require tools. These tools
are simply the applications and software
that are required to get the best of
online businesses.
For the setting up of a website, a
number of things will be required
especially the one from which payments
can be received. One among these will be
a merchant account. However, for several
businesses that operate online, merchant
accounts will no be required. Simply
put, a merchant account is a special
type of account which is provided by
certain firms to a person in order to
accept both offline and online payments.
For example, when a card is swiped at a
restaurant the payment will be made to
their respective merchant accounts.
Almost all the offline firms have
merchant accounts already. Many of the
online payment processors make use of a
merchant account for their trade and
also to accept the payments made by
clients.
Most of the traders who own small
businesses usually do not require
merchant accounts. This is because they
already have the option of 3rd
party processors like e-junkie, PayPal
and Citibank. If a business comes under
the small business category, then there
is no requirement for opening a merchant
account. It is best to use 3rd
party processors who act as go-betweens.
All that needs to be done is to register
with one of these firms. Once consumers
make purchases or buy products from
these merchants, the 3rd
party processors help in collecting the
payments for the total sale’s
percentage. The charges which could be
collected could vary from 0.04% to 10%.
When large orders need to be
processed or when a person wants to be
independent, then he/she will have to
acquire a merchant account. Many offline
firms already own merchant accounts
since it is not necessary that only
online trade needs to have merchant
accounts. Merchants can use this type of
account in order to accept payments for
their offline trade too.
The main why many trades who own
online businesses do to want or prefer
getting merchant accounts is the
acquisition cost and overhead involved.
When a merchant has his/her own merchant
account, then the payments need not be
processed through third party
processors. However, one must remember
that the merchant is responsible for
chargebacks, payment processing, refunds
and the other hassles that accompany the
acquisition of a merchant account.
However, merchant accounts are
beneficial when there is large business
volume and if one does not want to shell
out for using 3rd party
processors. Hence, it is best to see the
advantages that an individual merchant
has before acquiring a merchant account.
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