What is a Merchant Account?

A merchant account is a type of bank account that allows businesses to accept and process payments that are made with debit or credit cards. Merchant accounts require the partnership of an acquiring bank, which manages and provides services for electronic card payments.

Without a merchant account, businesses would have no way to accept payments or process payment transactions. To get approved for a merchant account, you will need to own a business or be a sole proprietor operating in a legal industry.

Depending on the industry your business operates in, as well as the current financial status of your business, you may be considered too “high-risk” for many banks and credit card processors to partner with. High risk merchants struggle to obtain merchant accounts, as they are often subjected to higher standards of approval.

Common Small Business Merchant Account Fees

If you plan on accepting credit or debit cards as forms of payment, you should expect to pay fees for the payment transactions. Common fees associated with merchant accounts include:

• Interchange Fees – Interchange fees are the per-transactions fees paid when funds are transferred from the customer’s bank account to yours. The customer pays for this fee, and it is collected by the card company.

• Chargeback Fees – Incidental fees occur when a customer successfully disputes a payment on their account.

• Payment Processing Fees – Payment processing fees are paid to your credit card processor for facilitating the payment from the customer to the merchant. These fees can be charged per transaction, or as a flat monthly rate, depending on the payment processor.

When choosing a small business payment processing company for your business, fees are not the only thing you should consider. How easily the company integrates into your business, their ability to detect fraudulent activities, and other factors should play a heavy role in your decision.

What is Payment Processing?

A payment processing company is the mediator between your bank, your customer’s bank, and the debit/credit card used in a payment transaction. When a customer pays with a card, the payment processor relays the details of the card and payment transaction to both banks. If the customer has sufficient funds in their account, the transaction will go though and the payment will be completed.

Payments processors also ensure the security of payment transactions. The purchase is made through a secure payment gateway, which enables customers to enter their payment information, and sends this information to the financial institutions of both parties. The data that is sent is encrypted, ensuring the security of the financial information provided is not compromised.

Small businesses will need a payment processor to facilitate their card transactions, but not every small business is approved. Credit scores, chargeback ratios, and other other factors surrounding your business will ultimately decide whether you will be approved by a payment processor. If you have been denied by other banks and processors, you should consider the services of a high-risk payment processor that specializes in businesses with less than favorable financials.

Small Business Payment Processing with TailoredPay

TailoredPay is a small business merchant account provider that specializes in high-risk merchant accounts. Even if you have been denied by traditional acquiring banks and payment processors, TailoredPay can get your small business merchant account approved within 48-72 hours after submitting an application.

Our payment gateways seamlessly integrate with the most popular selling platforms, like WooCommerce, Shopify, and Wix. TailoredPay can cover all of your small business payment processing needs, so you can focus on running a successful business.