What is a Merchant Account?

Processing credit and debit cards requires a merchant account. What is a merchant account and how does it function, you ask?

With electronic payments now taking precedence over cash, as a business owner, it's important to adapt to this new consumer trend.

Unfortunately, though, accepting debit and credit cards can't be done with a simple swipe. Businesses are required to work with a payment processor and obtain a merchant account.

While payment processing may be self-explanatory, you may be left wondering what exactly a merchant account might be? Fortunately, we've got the answers here at Epos Now. 

What do merchant accounts do?

In short, a merchant account is a type of bank account that allows businesses to accept credit and debit card payments. When a customer pays by card, the funds are transferred from their bank account into the merchant account.

While businesses cannot accept digital payments without one, you actually have no control over the merchant account that's attached to your business.

Rather, it is a holding place for electronic payments during the settlement period [1]. Once settled, the funds are then sent to your business bank account, a process that typically takes 1-3 working days.

What are the benefits of POS Merchant Services?

Of course, not all merchant accounts are equal. The best POS merchant services offer businesses the perks of payments flexibility and electronic point of sale (POS); Benefits to merchants include:

- Fast and secure payments: With a merchant account, businesses can be sure that payments are processed quickly and securely.

- Increased sales: Customers are more likely to make a purchase if they can pay by card, so having a merchant account could lead to an increase in sales.

- Improved cash flow: With funds being transferred into the merchant account within a few days, businesses can see an improvement in their cash flow.

- Flexible payment options: Merchant accounts offer businesses the ability to accept a variety of payment types, including credit and debit cards, e-checks, and even mobile payments, which makes for improved customer service.

- Protection: Most merchant account providers offer some form of chargeback protection, which can help businesses avoid costly fees. In addition, many merchant account providers offer fraud prevention tools to help businesses protect themselves from fraudulent transactions.

Why do businesses need POS merchant accounts?

With this in mind, why can’t merchants instantly deposit digital payments to their bank accounts? 

In short, it is a merchant’s best interest to keep these funds in their account for a few days. Let’s look at a few key reasons why this may be:

- To avoid chargeback fees: If a customer does not receive their product or is unhappy with the quality, they may file a chargeback. By keeping the funds in the merchant account, businesses can avoid having to pay chargebacks out of their own pocket.

- To improve cash flow: As mentioned before, one of the benefits of merchant accounts is improved cash flow. By holding onto the funds for a few days, businesses can avoid having to front the money for purchases.

- To take advantage of float: When businesses deposit checks into their account, they usually have to wait a few days for the funds to clear. This is not the case with merchant accounts. Since the funds are transferred electronically, businesses can save time, taking advantage of the float and using the funds right away.

What fees come with having a merchant account?

Once you set up your payment processing, you can expect to pay monthly and individual transaction fees. It’s also worth keeping in mind that companies charge various rates. 

Here at Epos Now, we think payments should be unproblematic. With our integrative app, Epos Now Payments, you can access everything from a single portal, accept card transactions at flat rates, and offer customers their preferred payment option.

Epos Now Payments is seamlessly integrated into your point of sale and/or point of sale system, helping you to take control of your finances, so you can focus on running your business. You can also maximise the effectiveness of Epos Now Payments and enhance your experience with our wide range of compatible partners in the AppStore.

How do you obtain a merchant account?

If you’re interested in obtaining a merchant account, the typical procedure is as follows:

• Scan the market for an appropriate merchant services provider. It’s crucial to do your research since certain companies can have fluctuating percentages. 
• Fill out an application with your provider of choice. [Be sure to collate all of the required information and documentation beforehand, ready to use] and wait for your application to be approved.
• Once you’re approved, you’ll need to set up your payment processing equipment. This may include a point-of-sale system, credit card terminal, or virtual POS terminal.
• Finally, you’ll need to activate your account and start processing payments. Once your account is up and running, you can begin accepting credit and debit card payments from your customers.

However, with Epos Now’s Merchant POS services, there’s no lengthy setup or complicated pricing. The onboarding process is simple: apply for payments via your Epos Now account, complete the security checks so we can validate your details, and you’re ready to take payments! 

Keep a firm hand on your finances with an award-winning POS system.

While there is a myriad of existing merchant solutions, POS systems are one of the simplest ways to process card transactions for both customer and merchant; POS transactions sync seamlessly with your system and are processed through a plug-in card terminal to accept credit, debit, and contactless payments (even with the physical card not present). 

The terminal will not only process the payments, but it will communicate with your POS system so you have accurate financial records. If you want to sell online, you will need to link your payment gateway with your store. When a customer completes a purchase, the payment gateway will collect their card information and facilitate the transaction. 

Financial management is a huge part of running a business, but it doesn’t have to be stressful and time-consuming. Let your point of sale handle things like reviewing sales, bookkeeping, and accounting tasks. Epos Now’s state-of-the-art POS systems for businesses in various industries. 

• Receive, create and send invoices using simple templates and a built-in VAT calculator.
• View detailed reports on profit margin, cash flow, and other expenses.
• Access multi-award-winning inventory management systems that sync online sales and in-person sales for the most up-to-date stock levels

Why do businesses need POS merchant accounts?

With this in mind, why can't merchants instantly deposit digital payments to their bank accounts? 

In short, it’s a merchant's best interest to keep these funds in their account for a few days. Let's look at a few key reasons why this may be:

• To avoid chargeback fee: If a customer does not receive their product or is unhappy with the quality, they may file a chargeback. By keeping the funds in the merchant account, businesses can avoid having to pay chargebacks out of their own pocket.
• To improve cash flow: As mentioned before, one of the benefits of merchant accounts is improved cash flow. By holding onto the funds for a few days, businesses can avoid having to front the money for purchases.
• To take advantage of float: When businesses deposit checks into their account, they usually have to wait a few days for the funds to clear. This isn’t the case with merchant accounts. Since the funds are transferred electronically, businesses can save time, taking advantage of the float and using the funds right away.

What are the merchant account fees?

Once you set up your payment processing, you can expect to pay a monthly minimum fee as well as individual transaction fees. It's also worth bearing in mind that companies charge various rates. 

Here at Epos Now, we think payments should be unproblematic. With our integrative app, you can access everything from a single portal, accepting payments at one fixed rate, as well as offering customers their preferred payment option.

Epos Now Payments is seamlessly integrated into your retail POS or hospitality POS system, helping you to take control of your finances, so you can focus on running your business. With our POS software, you can also maximise the effectiveness of Epos Now Payments and enhance your experience with our wide range of compatible partners via POS integrations available in our AppStore.

How do you obtain a merchant account?

If you're interested in obtaining a merchant account, the typical procedure is as follows:

• Scan the market for an appropriate merchant account services provider. It's crucial to do your research since certain companies can have fluctuating percentages. 
• Fill out an application with your provider of choice. Be sure to collate all of the required information and documentation beforehand, ready to use and wait for your application to be approved.
• Once you're approved, you'll need to set up your payment processing equipment. This may include a POS system, credit card terminal, or virtual POS terminal.
• Finally, you'll need to activate your account and start processing payments. Once your account is up and running, you can begin accepting credit and debit card payments from your customers.

However, with Epos Now's Merchant POS services, there's no lengthy setup or complicated pricing. The onboarding process is simple: apply for payments via your Epos Now account, complete the security checks so we can validate your details, and you're ready to take payments!

Keep a firm hand on your finances with an award-winning POS system.

While there’s a myriad of existing merchant solutions, POS systems are one of the simplest ways to process card transactions for both customer and merchant.

Point of sale transactions sync seamlessly with your system and are processed through a plug-in card terminal to accept credit, debit, and contactless payments (even with the physical card not present). 

The terminal will not only process the payments, but it will communicate with your POS system so you have accurate financial records. If you want to sell online, you will need to link your payment gateway with your store. When a customer completes a purchase, the payment gateway will collect their card information and facilitate the transaction. 

Financial management is a huge part of running a business, but it doesn't have to be stressful and time-consuming. Let your point of sale system handle things like reviewing sales, bookkeeping, and accounting tasks. Epos Now's state-of-the-art POS systems for businesses in various industries. 

• Receive, create and send invoices using simple templates and a built-in VAT calculator.
• View detailed reports on profit margin, cash flow, and other expenses.
• Access multi-award-winning inventory management systems that sync online sales and in-person sales for the most up-to-date stock levels.

Final thoughts

Understanding what a merchant account is and its role in helping with electronic payments is crucial for businesses looking to adapt to modern consumer trends. As a merchant account provider, Epos Now offers comprehensive solutions that enable businesses to accept payments seamlessly, unlocking a range of benefits for both merchants and customers.

By leveraging POS merchant services, businesses can enjoy fast and secure payments, increased sales opportunities, improved cash flow management, flexible payment options, and enhanced protection against fraud and chargebacks. These advantages not only streamline operations but also contribute to a better overall customer experience, driving business growth and sustainability.

As businesses navigate the complexities of payment processing, choosing the right merchant account provider becomes paramount. Epos Now simplifies this process with integrated solutions that empower businesses to accept payments efficiently, manage finances effectively, and focus on what truly matters — running and growing their operations.

Whether you're a retail establishment, hospitality venue, or online store, partnering with a reputable merchant account provider like Epos Now ensures that your payment processing needs are met with reliability, security, and ease of use. Embracing modern payment technologies through POS solutions sets businesses on a path toward success in today's digital economy, where convenience, speed, and trust are key drivers of customer satisfaction and loyalty.

Liked this blog? Check out our additional resources to dive deeper into payment trends and find the most cost-effective credit card processing for small businesses:

• Explore the latest insights and trends shaping the payment landscape. Visit payment trends to stay informed and make informed decisions about your payment strategies.
• Discover which credit card processing options offer the best value for small businesses. Visit which credit card processing is cheapest for small businesses? to compare rates, fees, and features to optimise your payment processing costs.

At Epos Now, we're committed to empowering businesses with the tools and knowledge they need to thrive in today's competitive market. Explore our resources and take your payment strategies to the next level!