As a small business owner, you may find taking credit cards as a form of payment would be easier. But in order to accept credit cards, you must first set up a merchant account.
What Is A Merchant Account?
A merchant account is a credit card payment facility, or a bank account, that enables a merchant to receive the proceeds of credit card purchases. It also enables the holder to deposit payments made by credit card. In short, it's a bank account for credit card payments.
There are three common types of merchant accounts:
- Retail Merchant Account
This is common for restaurants, grocery stores, and retail stores. This account has a lower transaction fee, but requires a card to be present at the time of purchase to be physically swiped through the credit card terminal.
- MOTO Merchant Account
This account is used primarily for mail and phone orders. There is a higher transaction fee because the credit card is not physically swiped, you or your employee types the card number in to the credit card terminal.
- Internet Merchant Account
This account is for internet transactions only. It is similar to the MOTO merchant account in the sense that a credit card is not physically swiped, instead it is processed online.
What Do You Need To Set Up A Merchant Account?
There are a few things you need before you set up your merchant account. Here is a list of things you could be asked to provide:
- checking account information
- voided check
- business license
- your business return policy information (if applicable)
- name, location, and contact information for your business
How To Set Up A Merchant Account?
Once you have decided on what type of merchant account your small business needs, you can start searching for a bank to get a merchant account through. Start with local banks or a bank you currently belong to.
But just like any purchase, do some research. Some banks may be offering free set up, free credit card terminals, or lower transaction fees. Make sure to read the fine print and get all the costs and fees on paper before signing up for a merchant account.