Merchant Status – Many people today like the ease of shopping with credit cards. For instance, in the United States, nearly 1 third of all purchases are made using credit. Therefore, it is essential that businesses accept credit card payments in order to ensure that they don’t lose sales.
What ever kind of business you operate such as small or a web-based shop or mail-order business using credit card payment options for your customers is sure to help the growth of your business. However, it is not possible to accept credit card transactions instantly. In reality, one needs to submit an application to a variety of banks to get the status of a merchant to be able to accept this. However, once your merchant status is confirmed and your business is approved, you is now ready to go.
How Does Merchant Status Work?
Your business should first join with a single or a handful of banks to accept credit card payments. Prior to that you have to apply to these banks in order to obtain merchant status. The banks will collaborate together with you to transfer the money from credit card transactions to customers within a few days after the transaction. They’ll also be accountable to collect the funds from the client, and as a result, your business pays them the standard commission, which ranges between 1.5 percentage to five percent for every transaction. Other charges could include monthly support, equipment rental.
What Do Banks Look For In Companies Applying For Merchant Status?
The process of applying for merchant status could be a procedure like the process of applying for a loan since lenders will certainly conduct an investigation your financial standing. The potential of having credit card payments made within your company will be analyzed. Here are a few things lenders must consider prior to granting merchant status:
* Your Business’ Type & Length of Time.
The lenders will need to determine if they are granting your business the status could pose higher risk for accepting credit card payments. For instance, companies that are based at home might have more trouble to get merchant status when contrasted to those that have stores. In addition, businesses which have been in operation for a while in comparison to companies that are just getting started may get status earlier.
* Your Sales Track Record.
The lenders would also want to see if your business can bring money in the process. If your business has a proven history, it will be more likely you are to attain standing.
* Your Credit History.
Creditworthiness in general will certainly be given a lot of consideration. Prepare yourself for personal or business credit history to be analyzed. This is why lenders could also look into your prior merchant accounts to see how the performance of your business because this can provide information about how credit-worthy you are.
What Should You Do To Achieve Merchant Status?
In order to prepare your company for a loan, you should be prepared to have all the information regarding your business and personal credit history. That includes the way you get the required funds for your business and the way you manage things within the business. A credit report for your business prior to launching is also a smart option.
Be sure that you’ve maintained a good personal and business credit score that lenders can take you into consideration faster. Be sure to pay your debts promptly and avoid piling massive loans.
For small businesses the idea of establishing a merchant bank account may not seem like too difficult initially, but when you begin accepting credit cards in your company, you will quickly realize the extent to which it will benefit your business.
It’s not just about increasing sales, but it will also give more convenience for your customers, and may even help establish your business. Additionally accepting credit card payments will definitely improve the flow of cash.
At the end of the day, when you see the ways your small business will grow with the status of a certified merchant and you’ll realize that your hard work was worthwhile.