With over ¾ of the American population using some form of plastic for regular purchases, businesses–especially online retailers–can’t afford not accept credit cards as a form of payment. Credit or debit/ATM cards make transactions fast, easy and error free. Credit cards are also reliable payment method for businesses that are not able to accept cash or checks.
Accepting credit cards isn’t only beneficial to retail stores. Professional service firms (accountants, attorneys, dentists, physicians, etc.) are also jumping on board, allowing customers to use credit cards to pay bills or invoices for services rendered. Accepting credit cards online allows you to take client payments quickly and easily.
To accept credit cards, you’ll need to open a merchant services or online credit card processing account. A merchant services account is the intermediary between your business bank account and your customers’ credit account. When a customer pays with a credit card, funds will usually reach your business bank account several days after the actual transaction–the merchant account provider verifies credit limits, processes the transaction and transfers the funds. Though credit card payments are not as fast as cash, they can definitely be faster and more reliable than the traditional invoicing process. There is no need to wait for customers to transfer funds or send a check.
Opening a merchant account provides several benefits. Businesses without merchant accounts usually use the “phone in” method to verify transactions. With a merchant account, you can use a credit card terminal or link processing functions to your POS system. Customer payments will take seconds to approve, and in some cases only a few hours to verify and transfer. Using a merchant account eliminates the need to phone a customers’ credit card company, verify the credit card number, customer information or relay purchase amount details.
Some businesses choose to accept credit cards without opening a merchant account. You can user an online payment service, such as paypal, to accept customer credit card payments easily. Most payment services transfer funds from a customer’s bank account into their service account (such as a paypal account) and then from their service account into your service account when a purchase is made. A drawback to using service accounts is that both the seller and the buyer must set up accounts well before any purchases can be made. Opening a service account usually takes several days for bank account verification.
Merchant accounts present an advantage over service accounts in that your business is able to accept payment from any customer, whether or not they use the same payment service you’ve linked to your site (PayPal is a good example). The most common credit cards, such as Visa and MasterCard, are used by millions of customers–setting up a merchant account allows you to accept payments from anyone who holds these cards.
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