Merchant Accounts- In this merchant accounts review, Web Host Ranking will discuss what merchant accounts are, how to find the best merchant accounts, why you need merchant accounts, merchant account fees and types of merchant accounts. Merchant accounts!
Merchant accounts are very important in eCommerce websites and traditional retail stores. This merchant account review is going to be very important to you if you want to accept credit cards and make money! Web Host Ranking has a lot of experience in merchant accounts. Both good and bad experiences. We decided to write this merchant account article to help you avoid those bad experiences!
What are merchant accounts? A merchant account is a form of a bank account that allows businesses, both offline and online, to accept payments by debit or credit cards. Some of the best merchant accounts even allow the retailer to accept eChecks. A merchant account also serves as an agreement between a retailer, a merchant bank and payment processor for the settlement of credit card and/or debit card transactions. Think of the merchant account provider as the middle man between the store and financial institution. Merchant accounts work side by side with payment gateways.
Why do you need a merchant account? The answer to that question is very easy…to make money! That’s right; it is a proven fact that stores that accept credit cards generate more sales and revenue. Web Host Ranking knows firsthand that we feel awkward these days when paying by cash. It’s not that we use credit cards, but using a debit card is so much easier. In addition to being a convenience, there have been studies done that say people who use plastic to make purchases spend more money than those paying by cash. Web Host Ranking can attribute this to a psychological reasoning. People don’t like to part ways with cold hard cash!
- Merchant account fees- There are fees associated with merchant accounts that you just can’t avoid. But there are some fees that you shouldn’t be paying. And that is what separates the best merchant accounts from every day merchant accounts. Here are some of the common fees that you can expect to pay for using a merchant account. Remember these merchant account fees are just part of the business to accepting credit cards and debit cards.
- Application fee- This is the initial application fee to the merchant account provider. Think of it as a credit check fee to make sure you are worthy of having the merchant account. A lot of merchant account hosts also charge a set up fee. You should only be paying for one of those fees.
- Chargeback fee- This is the biggest threat to banks and merchant account hosts. That is why every single merchant account charges a chargeback fee. Chargeback fees occur when a refund is initiated by the consumer’s financial institution. This is not a simple return, but rather deals with illegal transactions, incorrect transactions, or fraud.
- Minimum monthly fees- On an average size account, you don’t have to worry about this. All this is saying is that you agree to process x number of dollars each month in merchant account transactions. If you don’t meet x then you make up the difference. For example, your merchant account provider has a $50 a month minimum yet you only did $40 in merchant account fees that month. You would owe the merchant account provider an extra $10 that month.
- Discount fees/transaction fees- This is a set amount or percentage of the transaction total in which you agree to pay the merchant account for processing your transactions.
What types of merchant accounts are there? There are several different types of merchant accounts. Web Host Ranking has listed the most common types of merchant accounts and a short explanation of each one.
- Internet merchant accounts- Designed specifically for online stores.
- Adult merchant accounts- Designed for businesses that deal with adult oriented products. Not necessarily porn related, but usually any business that has an age limit on selling their product to a customer.
- Wireless merchant accounts- Designed for businesses that are on the road and don’t have a credit card terminal. Using a wireless connection you can hook up with your merchant account host.
- Pay by Phone merchant accounts- Designed for businesses that accept credit cards or debit cards over the phone, where the card is not present for the transaction.
Who offers the best merchant accounts? There are only three merchant account providers that Web Host Ranking recommends. The reason we like these three merchant account provider is because they are reliable, cheap merchant account fees, and offer great services.