A merchant account is a type of bank account that allows businesses to accept credit and debit card payments. Merchant accounts are established through banks or other financial institutions, and they typically come with several fees, including monthly service charges, transaction fees, and chargeback fees.

Businesses need merchant accounts to process credit and debit card payments from customers. Merchant accounts make it possible for businesses to receive payments quickly and efficiently, without having to wait for checks to clear or money to be transferred into their bank account. Merchant accounts also offer businesses protection against fraud and chargebacks.

There are a few different types of merchant accounts that we will be discussing in this article as well as their pros and cons of each.

What are the Different Types of Merchant Accounts?

There are a few different types of merchant accounts, including retail merchant accounts, e-commerce merchant accounts, and mobile merchant accounts.

• Retail Merchant Accounts

Retail merchant accounts are the most common type of merchant account, and they’re typically used by businesses that have a physical storefront. A retail merchant account is a type of bank account that allows businesses to accept credit and debit card payments from customers.

There are several benefits to having a retail merchant account:

• Ability to process payments quickly and easily – When you have a retail merchant account, you will be able to process payments quickly and easily. Customers will be able to use their credit or debit cards to make purchases from your business, and you will be able to receive the payments immediately.
• Increased Sales – This can be a great way to increase sales, as customers will be more likely to make purchases if they know that they can use their credit or debit cards.
• Improved Customer Service – When customers know that they can use their credit or debit cards to make purchases, they will be more likely to return to your business in the future.

There are also some drawbacks to having a retail merchant account:

• Higher Fees – One of the biggest drawbacks is that you will have to pay higher fees for processing payments through your account.
• The need to maintain a good credit rating – You will need to maintain a good credit rating to qualify for a retail merchant account.
• The Possibility of Fraud – There is the possibility of fraud when you have a retail merchant account. Although there are ways to protect yourself from fraud, it is still a risk that you will need to be aware of.

Overall, a retail merchant account can be a valuable tool for businesses that want to accept credit and debit card payments from customers. However, you will need to weigh the pros and cons of having a retail merchant account before deciding if it is right for your business.

• eCommerce Merchant Accounts

eCommerce merchant accounts are online payment processing solutions that allow businesses to accept credit cards and other electronic payments from their customers.

There are several advantages to using an eCommerce merchant account.

• Allows businesses to reach a wider customer base: One of the biggest advantages of using an eCommerce merchant account is that it allows businesses to sell their products or services to customers anywhere in the world. All they need is an internet connection and a credit card. This means that businesses can reach a much larger audience than they would if they were only selling through brick-and-mortar stores.
• Increased sales: Another advantage of using an eCommerce merchant account is that businesses often see an increase in sales when they start accepting credit card payments. This is because customers are more likely to make a purchase when they can pay with a credit card rather than cash or check.
• Improved cash flow: Another benefit of using an eCommerce merchant account is that it can help improve your business’s cash flow. This is because you won’t have to wait for customers to send you a check or money order in the mail before you can deposit it into your bank account. With an eCommerce merchant account, funds are transferred into your account immediately after the customer makes a purchase.
• Convenient for customers: Ecommerce merchant accounts are also convenient for customers. They don’t have to worry about carrying cash or checks around with them when they’re shopping online. And, if they need to return an item, they can do so without having to go through the hassle of mailing it back to the store.

While there are key advantages there is also some downsides to eCommerce merchant accounts.

• Potential for fraud: One downside of using an eCommerce merchant account is that there’s a potential for fraud. This is because businesses are trusting customers to input their credit card information correctly. If a customer makes a mistake when entering their credit card number, the business could be responsible for any fraudulent charges that result.
• Higher fees: Another disadvantage of using an eCommerce merchant account is that businesses often have to pay higher transaction fees than they would with a traditional merchant account. This is because there’s a higher risk of fraud with these types of accounts. businesses should compare fees before signing up for an account to make sure they’re getting the best deal.
• Requires a website: Another downside of using an eCommerce merchant account is that businesses need to have a website to accept credit card payments. This means that businesses will need to invest in a web hosting plan and set up a shopping cart on their site. If you don’t have experience with building websites, you may want to hire someone to do it for you.

As you can see, there are both advantages and disadvantages to using an eCommerce merchant account. Before you decide if it’s right for your business, weigh the pros and cons carefully to see if the benefits outweigh the risks.

• Mobile Merchant Accounts

Mobile merchant accounts are simply regular merchant accounts that have been enabled to accept payments via a mobile device, such as a smartphone or tablet. 

Mobile merchant accounts come with a few key benefits such as:

• Allows businesses to accept payments anywhere, anytime: One of the biggest advantages of using a mobile merchant account is that it allows businesses to accept payments anywhere, anytime. This is especially beneficial for businesses that operate in industries where customers may not always have access to traditional forms of payment, such as cash or check. For example, businesses that offer services such as home repairs or yard work may find mobile merchant accounts to be particularly helpful, as they can simply process payments on the spot, without having to wait for customers to get home and write a check.
• Helps Businesses streamline their payment processing: Another advantage of using a mobile merchant account is that it can help businesses streamline their payment processing. In many cases, businesses that accept credit cards or other forms of electronic payments will have to set up separate processing accounts with each individual card issuer. This can be both time-consuming and costly. However, by using a mobile merchant account, businesses can save time and money by processing all of their payments through a single account. This can greatly simplify accounting and bookkeeping for businesses, as well as make it easier to track sales and expenses.

There are a few potential downsides to using a mobile merchant account, as well.

• Security: One of the biggest concerns is security. When customers provide their credit card information to a business, they are trusting that the business will keep their information safe and secure. However, if a business does not have adequate security measures in place, it could put customers at risk of identity theft or fraud.
• Competitive Disadvantage: In addition, businesses that do not accept mobile payments may find themselves at a competitive disadvantage, as more and more consumers are beginning to use their smartphones and tablets to make purchases.

Overall, mobile merchant accounts can be a great way for businesses to accept payments and streamline their payment processing. However, there are a few things that businesses should keep in mind before signing up for a mobile merchant account, such as the potential security risks and the need to stay competitive. With that said, mobile merchant accounts can be a great way for businesses to take advantage of the growing trend of mobile commerce.

If you’re thinking about starting a business, or if you already have a business but don’t have a merchant account, it’s important to understand the different types of merchant accounts and the fees associated with them. A retail merchant account is the most common type of account, and it’s typically used by businesses that have a physical storefront. An e-commerce merchant account is designed for businesses that sell products or services online, and a mobile merchant account is for businesses that process payments using a mobile device.

In Conclusion:

Merchant accounts are an essential part of doing business in today’s world. They allow businesses to accept credit and debit card payments, which can be a quick and convenient way for customers to pay. Merchant accounts also offer businesses protection against fraud and chargebacks.

The type of merchant account you need will depend on the type of business you have and how you plan to accept payments. If you are not sure which type of merchant account is right for your business, Balanced Processing Partners may be able to help.  Please contact us at (800) 354-6256 or via email at [email protected] and we will be happy to help you select the best option.