If you’re planning on starting a business you’ll soon find it’s more involving than imagined.
At least, that’s how it can feel when you start looking at practicalities like supply chains, premises and processing payment.
Thinking about how you’ll take and process payments may not be the most exciting part of starting a new business, but it’s one of the most important. It’s how you’ll turn your passion into an income.
Payments fuel business
We’re often asked about the role of merchant services in payments, as many wonder why they need a business bank account and a merchant account. Here, we’ll look into the role of each, and a few things to to watch out for when choosing a merchant account.
First, let’s take a closer look at merchant services. And don’t worry if this seems complex: much of it is automated, and takes place behind the scenes. All you need do is focus on your next customer.
What are merchant services?
Merchant services is the term used to describe the payment process itself, essentially a series of steps and checks to ensure that money moves from a customer’s account to your business bank account.
Imagine you’ve just processed a payment worth £25. The transaction happens in a flash, your customer walks out happy and you know that £25 is on its way to you. It’s fast and simple – but behind the scenes, there’s a lot going on.
The payment process explained
All payment requests go through some kind of Payment Gateway. Your card machine uses it to contact the Acquiring bank – the bank where you have your business bank account.
From here, your business bank makes an authorisation request to the card issuer (Visa, MasterCard, etc). This is sent on to your customer’s bank (known as the Issuing Bank).
If funds are available, the transaction is processed and money is released, on its way to your merchant account.
The role of a merchant account
What we’ve described above are merchant services. Sometimes, companies will interchange the terms merchant services and merchant account – but they’re all ultimately referring to the payment process. That said, the merchant account has a specific role.
When funds are sent from your customers’ bank account, they go to your merchant account. It acts like a halfway house between you and your customers: it checks the customer has enough funds in their account, takes the money and holds it in your merchant account from where relevant fees are deducted, and the process is completed. Funds are usually sent to your business bank account, in 3 – 5 working days.
It sounds involving, but it all takes place behind the scenes. All you’ll notice is a speedy transaction, a happy customer and, a few days later, money in your bank account.
When you’ll need more than one merchant account
You know that saying about bits of string and length? Well, the same applies to merchant accounts: the amount you’ll need depends on many factors, like how many locations you’ll take payment from.
If you have just one shop, you’ll only need one merchant account. But if you have several shops, then each will need its own merchant account. (As long as each shop has its own account you can connect as many card machines as you like to it.)
And whether you own premises or not, if you want to accept card payments online, by
phone or email, then you’ll need to open a merchant account for each method. Don’t worry if this sounds like a logistical nightmare: we can handle everything from end to end.
How to choose the best merchant services for your business
Cost is always the leading factor – yet it’s rare to find a card processing company advertising fees and costs.
The reason is that it’s difficult: every business type, every credit history, and the evaluated ‘risk’ will differ. Other factors that influence cost include turnover, the split between debit and credit card payments, the number of card machines needed…
So the only way to find out the cost is to request a quote. Draw up a shortlist of preferred providers, and contact each with a few details about your business. Why not start right here? We can give you a fast, accurate quote online in just a few minutes.
If you can’t check the price, check what’s included
One thing you can check is what a payment processor includes in their merchant services. What’s included, and what’s an extra?
Our merchant services are free. None of the 70,000 businesses in Britain and Ireland pays to use their merchant account or merchant services. It’s included in the cost of their card machine rental.
And each year, we process over £10Bn in payments for them, from initial transaction to the money landing in their bank account. Well, making passion pay is what we’re all about, after all.