When you start a new business, you want to do everything you can to ensure that it succeeds. Some startup founders are hesitant to create merchant accounts because of the potential cost. However, in most cases, the cost of not having one is significantly greater than the associated fees. If you are running a startup, there are some significant advantages to getting a startup merchant account.
A merchant account is a special type of bank account used for processing payments, particularly from debit and credit cards. In most cases, you will work with a merchant service provider to create the account. It will be acquired by a banking institution. These two entities, along with the credit card provider (Visa, MasterCard etc.), will handle the processing of payments.
There are several arrangements for merchant accounts. Some are shared whereas some are direct. Similarly, they can be set up using an API that connects to the payment processor or with a simpler, out-of-the-box solution. However, any business that is accepting payment cards is using a merchant account.
Benefits of a Merchant Account for a Startup Business
Every business can benefit from using a merchant account. No matter what your company does, you need to be able to accept payments. These are some of the advantages of offering your customers the option of paying through your merchant account:
- Accept Credit Cards: This is the main reason for getting a merchant account. If you want to accept payment cards, you need one. This advantage alone should be enough to convince most business owners to open an account.
- Convenient Payment Options: Let your customers choose the way to pay that is most convenient for them. This will achieve more than just better customer satisfaction. When your buyers can pay conveniently, they will be more likely to purchase more from you more often. In short, it is good for your bottom line.
- Fast and Secure Payment: Payment cards are a relatively fast and secure way to receive payment. You get immediate confirmation that the transaction will happen, and the technology keeps improving. While there is fraud with payment cards, there is fraud with other payment types also. Furthermore, there are many ways for merchants to protect themselves.
- Accept More Currencies: If you are doing business online, you may have international customers. Many merchant accounts will let you accept currencies that may otherwise be a problem. This can significantly increase the potential market you can work with. While international checks and money transfers are possible, they are often cumbersome and slow.
Overall, having a merchant account means that your startup can do more business. While some industries are better suited for accepting payment cards, offering the option is nearly always a good thing.
The Process for Getting a Startup Merchant Account
Getting started with a merchant account is very easy. Simply find a service provider such as Instabill and apply for an account. Once you have been accepted, you can connect your storefront to the merchant service provider’s system and begin processing payments.
The approval process involves underwriting at the acquiring bank. Some service providers work with a single bank while others may have a network to choose from. The latter setup means that you will likely get better terms due to the choice and competition.
Depending on the nature of your business, you may want to consider a high-risk or offshore account. If you are in an industry such as adult content, weight loss products or online gambling, you may need a high-risk account because these fields are more prone to fraud. Instabill offers special accounts designed to help high-risk businesses get the most from their payment processing experience.
Offshore accounts can help businesses optimize your tax burden by processing payments in an overseas jurisdiction. This can be helpful for certain organizations, especially those that do business globally. Instabill offers offshore merchant accounts through a diverse network of acquiring banks in different countries.
Of course, many businesses simply need a typical, domestic merchant account. You could be accepting payments as soon as today if you apply for an account. This could be the next step towards your startup’s success.
You may have heard about the Payment Card Industry standards. These govern how payment information is processed, transmitted and stored. Fortunately, many of the practices required by the PCI standards are best practices for setting up an online store. Nonetheless, it is a good idea to familiarize yourself. Following the standard not only protects your customers but also your business.
Some startup merchant accounts handle a lot of the PCI compliance concerns for you. Before setting up an account, learn what the implications are for your compliance needs. In many cases, it is better to be safe than sorry. Plus, having a secure website can increase your sales. Learn more about merchant accounts for your startup today.