A merchant account is a business relationship between a supplier of goods and services and a financial services company. The supplier uses the merchant account services provided by the financial company or bank to process payments received from customers. Almost all banks that process business accounts offer merchant account services, both as a revenue stream for the bank and to help business owners increase the number of payment options available to customers. There are four types of merchant account services: credit card processing, Internet-based payments, transactional reports and business management advice.
The processing of credit and debit cards is the most common of the merchant account services provided. The financial company leases the point of sale equipment to the business. Each time the customer chooses an electronic payment method, the network is used to confirm that the funds are available and to transfer them from the customer's account to the vendor. The actual receipt of cash usually is delayed for two or three business days and is then automatically deposited by the service provider.
The increased popularity of shopping via the Internet created a surge in demand for online payment processing. In order to access these merchant account services, companies are required to create a website that offers information about the products for sale and allows the customer to place an order electronically. Most merchant services companies have a specific tool or process that must be integrated into the company's website in order to accept payments electronically.
Most financial services offer a series of additional products as part of their merchant account services package. These additional products usually include access to detailed and summary reports. Using the reports provided, the business owner can evaluate the spending activity and payment methods used by customers. Depending on the format of the reports, they often can be downloaded in an electronic format, then uploaded into the company's financial system.
Business management advice and consulting services are other options in the merchant account package. These services are not included in the monthly fee but are priced separately, based on what type of service is needed. For example, a small distributor with no information technology staff might need assistance to create and implement an online shopping website that is completely integrated with its financial system. This type of service can be arranged with the financial services company.
