Why Would a Small Business Need a Merchant Account?

Your small business needs lots of different kinds of accounts and services to work well. Whether it’s the delivery service for your product or the software you use to serve your customers, there are a wealth of tools and services you need to be successful. There are also a ton of different kinds of administrative accounts and services you need; one of the most important is a merchant services account. Why would you need one of those you ask? Well, a merchant account is your key to processing payments safely and securely, as well as making a whole host of other things about running your business a ton easier.

There are lots of reasons why you’d need a merchant or merchant services account. Here, we’ll go through some of the main ones and talk a bit about what you should look for when you’re shopping for one.

Looking for help on finding the right merchant account for you? Book a free consultation with Swipesum today!

What is a merchant services account?

A merchant account helps make your business a business. Without it you wouldn’t be able to accept payments, process transactions and generally work with the rest of the financial services marketplace. It makes your business function. Merchant account providers are companies that specialize in these kinds of accounts. They offer a variety of services, including payment processing, but also security features, mobile payment options, physical hardware for stores and customer support to help your business thrive. 

It’s important to remember that a merchant account is separate and distinct from your business’ bank account. At the end of the day, that's where your money ends up, but in order to get there, it has to travel through your merchant account. Why? Well, merchant account providers specialize in working with the hundreds of different payment options that exist in our modern consumer environment. From credit to debit cards, online payments, crypto and everything in between, your business is going to want to provide as many of these payment options as possible. We’ll explain why down below, but suffice to say, your merchant services provider helps orchestrate all of these disparate pieces.

So why would I need one…specifically?

There are lots of great reasons your small business will need a merchant account. 

1. Accepting Credit and Debit Cards: A merchant account enables a small business to accept payments from customers using credit and debit cards. By offering this payment method, businesses can cater to a broader customer base and increase sales opportunities. With a merchant account, the business can securely process card transactions.
2. Online Payments: If a small business operates online or plans to establish an e-commerce presence, a merchant account becomes essential. It allows the business to integrate payment gateways into their website, enabling customers to make online purchases. Online payments are convenient for customers and can significantly expand a business's reach beyond its physical location.
3. Credibility and Customer Trust: Accepting card payments through a merchant account enhances the credibility of a small business. Customers often perceive businesses that offer card payment options as more established, professional, and trustworthy. Having a merchant account can build confidence in customers and encourage them to make purchases.
4. Streamlined Transactions: A merchant account simplifies transaction processes for a small business. When customers pay by card, the funds are deposited directly into the merchant account. This eliminates the need for manual cash handling or invoicing, reducing administrative tasks and potential errors. Streamlined transactions can save time, improve accuracy, and enhance overall operational efficiency.
5. Mobile Payments: Many small businesses operate in mobile or remote environments, such as food trucks, trade shows, or delivery services. A merchant account can enable the business to accept mobile payments through smartphones or mobile card readers, providing convenience and flexibility in accepting payments on the go.
6. Reporting and Analytics: Merchant accounts often come with reporting and analytics tools that provide valuable insights into sales trends, transaction volumes, and customer behavior. Small businesses can leverage this data to make informed business decisions, identify growth opportunities, and refine their strategies.
7. Access to Additional Services: Merchant account providers may offer additional services that can benefit small businesses. These services may include fraud detection and prevention tools, recurring billing options for subscription-based businesses, customer support, and integrations with accounting or inventory management software.

Those are the big reasons but there are a few that are a bit deeper and ephemeral.

1. Increased Sales Potential: People who use payment cards tend to spend more money. People that use certain payment card brands also tend to spend more than other consumers. Being in a position to access both of these groups is crucial.
2. Chargeback Protection: These are some of the most time-intensive and irritating parts of owning a small business; having a merchant services provider in your corner helps immensely. 
3. Customization: Many merchant account providers will allow you to include your own branding on both point-of-sale systems and online stores. This helps keep your brand top of mind for anyone making a purchase.

What to consider

Size & Type

Your merchant services provider should be an expert in the size and type of business you operate. Not all merchant services providers are created equal - some specialize in small businesses and other in large. Still others are exports in specific marketspaces. Pick the right one for you.

Cost

Nothing’s free and merchant services are no different. Make sure you understand what you’re paying and why before you get started with any provider. If you’ve been with the same provider for a long time, be sure to keep your eyes open for other deals.

Growth

Your merchant account provider should be able to grow with your business and scale their operation effortlessly. Right now you might only be serving your little town, but if you’re successful you’ll be servicing the whole state. Be sure to get a company that can grow with you.

Help

Look, this is a confusing topic. The number of types of accounts make understanding exactly what you need all that much more difficult. Swipesum has the tools to help you make a decision on a new provider for your business and help you work with an existing one.