Getting paid for the goods and services you sell is an essential part of any business. However, things have progressed far beyond the past when merchants could get by on checks and cash. In the modern age, people have other options for payment.

More people use credit and debit cards than ever before. Also, people are using innovative ways to pay for the goods and services they consume. This includes things like wallets built in to smart phones as well as cryptocurrency like Bitcoin and Ethereum.

If your business wants to compete in the modern day, then you’ll need to be able to conduct transactions using these forms of payment. However, the ability to do the transactions is only half the battle. You also need access to the money you make from these transactions.

Merchant accounts are the answer to this problem. These accounts link with your payment processing, payment gateway, and other merchant services. As a result, you get fast access to the cash you make by running your business.

You can use this money to cover your basic operating costs. You can order more inventory, pay bills, cover payroll, and so on. You can also use it to plan for growing your business to make it stronger and more profitable.

However, it’s hard to do these things if you’re constantly waiting for money to show up. That’s where merchant accounts come in. These accounts deposit money from your credit card and other sales directly into an account where you can access it. This lets you get your money much faster than other possible payment methods.

This article covers the basic information about merchant accounts. It helps you determine if you need a merchant account. It also goes over the questions and things to consider when you’re looking for the best merchant account service. Use this information to help grow your business and earn the living you deserve.

What Are Merchant Accounts?

Merchant accounts are specialized types of bank accounts that link up with payment processing systems. They act as a special line of credit. The payment processing system or merchant account provider deposits money into the account for transactions you’ve done. It does this before the transactions are finished settling. As a result, you don’t have to wait days, weeks, or even an entire month to get access to the money you need to run your business.

In order to understand the service that a merchant account provides, you need to understand the electronic payment process that credit and debit cards use.

The first step in a card-based transaction is for your payment processor to contact the payment brand of the card. For example, American Express or Visa. The payment brand forwards the request to the issuing bank. After that, the bank informs the payment brand if the cardholder has enough credit or funds to cover the purchase. The payment brand then forwards this information to your payment processor, who tells you whether the sale is approved or not.

Once that process is complete, the various parties involved begin the process of settling funds. This is the process of transferring money through different parties to eventually wind up in your bank. Given the number of organizations involved and the complexity of modern bank rules, this can take some time.

A merchant account works like a special line of credit. The merchant account issuer credits your account with the funds from your transaction before they’re done settling. They charge you a small fee for this service. Usually, this fee is a percentage of the transaction plus a certain amount. However, we’ll talk more about fees later on.

Many merchant service companies provide merchant accounts as part of a package of products and services. They also over payment processing, payment gateways, and more. Therefore, it can be hard to determine if you need a merchant account. It can also be hard to figure out which merchant account provider offers the best value. We’ll look at each of these questions in order.

Do I Need a Merchant Account?

Most businesses benefit from having a merchant account. After all, there aren’t many business models that benefit from having delayed access to funds. However, there are times when a merchant account might not be in your best interest.

For example, if you do most of your business in cash and checks, then a merchant account might be more than you need. It can also be hard to get a merchant account depending on the type of business you do. High-risk businesses, that is, businesses where there’s a high-risk that the transaction will not ultimately be approved, will have to pay more for merchant account services. That can mean that these accounts don’t actually benefit your bottom line.

However, most brick-and-mortar and online businesses can get lots of value from a merchant account. It makes it easier to get your money. It also gives you access to your money faster. Moreover, if you get a merchant account as part of a package of merchant services, it can come with other benefits as well. These include things like payroll and scheduling software, point of sale systems, business analytic abilities, and more.

Businesses that operate on thin margins especially benefit from merchant accounts. Examples include retail stores, gas stations, and other businesses that rely on a low-margin/high-volume business model. These companies need fast access to their transactions so that they can cover their operating expenses. That means things like overhead, payroll, inventory, and other costs.

If you don’t have fast access to your transactions with this kind of business model, then you put your business at risk. Stores with empty shelves don’t draw customers. Employees that don’t get paid stop showing up. And it’s hard to do business if the power company shuts off your electricity.

This can be the death knell of a small business. You need to stay on top of your expenses in order to keep running. And you need access to the money you make in order to stay on top of those expenses. In an era where so many transactions are card-based, a huge sum of your funds can be tied up for days while your expenses go unpaid.

How Do I Get the Best Merchant Account?

It can be tricky to find the best merchant account. There are several reasons for this. First, each business is different. That means each business has different needs and goals. Therefore, every merchant account won’t be suited to every business.

Also, it can be difficult to do an apples-to-apples comparison of merchant account providers. This is because different providers set up their fee structure differently. Some only charge per-transaction fees. Others charge other fees that are usually hidden. This can include one-time charges like a startup fee. It can also include recurring charges like PCI compliance fees, monthly maintenance fees, and more.

Another thing that makes it difficult to compare merchant account service providers is the different benefits, features, and packages that each one offers. One provider might charge a bit more but will include a feature that can help your business run more efficiently. Others might charge less but lack features and services.

One good way to get an idea of how much the different merchant account providers stack up to each other is to determine what percentage of your total transactions each month will go toward paying your merchant services fees.

When you do this in conjunction with looking at the benefits each company offers, you’ll be able to have a better idea of what provider offers the greatest value for your business.

There are a few things you should take into account, regardless of what kind of business you operate. These criteria will help you weed out the bad merchant account providers and help you find the best merchant account for your business.


The most important thing when considering any merchant services is the level of transparency the provider offers. You want a company that is up-front and clear about its pricing and fees. That lets you create a more predictable operating environment for your business. Any business owner will tell you that predictability is essential when you’re trying to grow your business.

Many companies charge hidden fees for their merchant account services. These fees can include things like early termination fees and startup fees. However, they might include other things. For example, if you’re getting your merchant account and payment processing services from the same company, you might get charged more to process specific payment brands.

This can radically alter the amount of money you’re actually operating with. That’s why it’s important to pin a company down to an exact list of fees and pricing structures. A company may charge one rate to process Visa transactions, and a different rate to process American Express transactions.

Therefore, you’ll want to look at what percentage of your transactions happen through different payment brands so that you can get a better idea of what your actual cost will be. The best merchant account providers use interchange plus pricing. This pricing model means they charge you the cost of executing the transaction plus a fixed amount. This might look something like 2.5% + $0.30. That means that the fee for executing and depositing the transaction will be 2.5% the value of the transaction + $0.30. That means it would cost you $0.55 to run a $10 transaction.

Value-Added Benefits

You should also look at the different benefits that merchant account providers offer. Especially since most merchant account providers will also be providing you with other merchant services. A slightly higher rate is worth it if you can get payroll software that frees up more of your time to grow your business.

It’s important not to let these extra features and value-added benefits distract you though. While it’s always good to plan for growth, you shouldn’t get a service that offers a bunch of features you don’t need. For example, an online retail store doesn’t need a point of sale system. That means that benefit doesn’t add any value to the merchant.

Cheapest Merchant Account Isn’t Always the Best Merchant Account

Another thing to keep in mind is that the cheapest merchant account isn’t always the best merchant account. In fact, sometimes the cheapest merchant account isn’t even the cheapest option.

Many business owners look exclusively at the per-transaction rates their merchant services company offers to make a choice. However, these rates don’t take into account hidden fees and other intangible benefits. Therefore, they may wind up costing you more in the long run.

Another key element to consider is how quickly the merchant account makes funds available to you. You need to understand your business, it’s needs, model, and operating expenses, to determine how fast you need your money to be accessible. A low-overhead company with sufficient operating capital on hand doesn’t need to pay higher fees for slightly faster access to funds.


In the end, it takes careful planning, research, and consideration to pick the best merchant account service. You should research merchant account reviews. This will give you an idea of how each service provider deals with its customers. Something you should keep in mind is that this industry doesn’t lend itself to people going out of their way to give positive reviews. After all, when your merchant services operate effectively, you don’t notice them. Therefore, you shouldn’t be put off by a disproportionately large number of negative reviews to positive reviews.

Finding the right merchant account service is a great way to give your business the resources it needs to thrive and grow. It helps ensure that you can conduct all the transactions you need, and it provides you fast access to the funds you generate. This can be the difference between a successful business and one that never quite gets off the ground. Don’t let lack of access to your funds slow your business down. Find the right merchant account service provider for your business today!

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