Understanding the meaning and working of a Merchant Account

Setting up and successfully running a business of your own is a daunting task. You need to be hands-on with everything. You need to look after the proper production of goods and their subsequent distribution. You need to check on the inventory and curate marketing and advertising plans. You also need to have a strong hold over your cash flow. Customer payments make up a significant part of your business cash flow.

It is a key indicator of your business's profitability. Today customers have become very picky. They look for nothing but the best and are willing to pay a good price for it. They look for various options to make payments as well. To survive in the cutthroat market competition, your business should have the best offering and be open to receive payment of all kinds. Opening a Merchant Account proves to be helpful.

What is a Merchant Account?

Merchant Account is a Business Account. It primarily acts as a middleman allowing you to accept various types of payments. You can accept payments made through a Debit Card and Credit Card both offline and online. Recently, it has also made it possible for you to accept digital wallet payments. Every time you receive payment it automatically reflects in the Bank Account.

You are notified about the same of your registered mobile number and email address. This ensures maximum convenience and security of the transaction. Here’s an example to understand the working of a Merchant Account better. For instance, a customer buys your products from your retail store. They make the payment of Rs. 5,000 using their Credit Card. Once the payment is made, the amount will directly get credited to your Merchant Account.

You can see the amount is reflected in your account immediately and also receive an SMS alert.

How to choose a bank for opening a Merchant Account?

Almost every leading in the country offers Merchant Account as a part of their offering. The key account features remain the same, however, a few additional benefits are different for every bank. Hence, you must get to know the product offerings of various banks and then open an account. Consider the following two factors for account opening:

Customer information security

Your customers are likely to enter their card details to make the payment. Hence, customer information security is an important consideration to make. The bank should have an end-to-end payment system and must pledge to not share information with any third party.

Efficient solutions

The bank with its Merchant Account should offer efficient solutions that simplify your business’s payment structure. It should allow you to accept a range of payments. This will help you satisfy your customer's expectations and eventually boost your profits.

Arjit Chalmela is a finance student who loves to write in his free time. He has spent considerable time researching the foreign exchange rate.