Merchant Processing

Merchant processing gives a business the ability to accept certain forms of electronic card payments.
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Merchant Processing

Merchant processing, sometimes also referred to as merchant credit card processing or merchant accounts are business bank accounts that give a business the ability to accept certain forms of electronic card payments. 

Merchant processing is necessary if a business would like to extend these forms of payment (credit and debit) to their customers. 

Merchant processing involves establishing a bank account with what is known as an acquiring bank.

The acquiring bank facilitates electronic payments. 

Merchants and acquiring banks enter into detailed agreements that outline the terms of the relationship. 

Some items that will be outlined include: 

  • Per transaction costs
  • Fee structures with card networks (ie. Mastercard, Visa, etc.)
  • Any recurring monthly or annual fees
  • Termination fees, if applicable

There are a variety of options available to businesses and each payment processor will have a slightly different pricing structure and agreement. 

This can even vary by the business due to the nature of the industry or the financial history of the business. 

Some common pricing models for credit card processing include:

  • Flat rate pricing
  • Subscription pricing
  • Tiered pricing

Be sure to review all agreements, rates, and fees carefully before entering into any contract for your business. 

Payment processors should be able to transparently share details of their pricing structure and advise as to which might be the best fit for your business.

Merchant processing comes at a cost as the payment processor also needs to make a profit as well. The charges do vary per structure and per processor, however, so be sure to compare processors. 

Merchant processing is essential in today’s marketplace unless you will exclusively accept cash or check payments. 

Merchant processing can also add valuable features to a business like software that provides the ability to manage customers, inventory, and transaction history. 

These are built into the cost of processing so choosing a payment processor that offers features that support your business is another aspect to consider. 

 

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