Merchant Status For Your Business – Many people today prefer the convenience of shopping through a credit card. In the United States, nearly 1 in 3 consumer purchases is paid for through credit. Therefore, it is important for businesses to easily accept credit payments to avoid losing sales.
No matter what type of transaction you run, whether it’s a small store, an online store, or a mail order business, having a credit card service for customers will definitely be helpful for the growth of your business. However, one could not only accept credit card payments in an instant.
Accepting Credit Cards: Merchant Status For Your Business 2021
In fact, one has to apply to several banks for merchant status in order to do this. But once your merchant status is established, then your business will be ready to go.
How Does Merchant Status Work?
Your business must first partner with one or more banks in order to accept credit payments. Before doing so, you need to apply to these banks to achieve merchant status. These banks will work with you to transfer the money paid through the credit by the customer within a day or two of the sale.
They will also be responsible for collecting money from customers, and in return, your company will pay them regular commissions, ranging from 1.5 percent to 5 percent for each transaction. Other costs may include monthly support and equipment rental.
What Do Banks Look For In Companies Applying For Merchant Status?
Applying for merchant status can be a similar process to applying for a loan, as lenders will inevitably investigate your overall financial status. The feasibility of credit payments being used through your business will definitely be taken into account. Here are some factors lenders should consider before granting you merchant status:
Your Business’ Type & Length of Time.
Lenders certainly need to know if giving your business its status may have a higher risk of receiving credit payments. For example, a home business may have a harder time obtaining merchant status compared to a business with a store. In addition, companies that have been established for some time in contrast to those just starting out can be granted status faster.
Your Sales Track Record.
Lenders will also be interested in finding out if your company can really bring money to the table. If your company has a reliable sales history, then it is becoming easier for you to achieve status.
Your Credit History.
General solvency will definitely be given a lot of consideration. Be prepared to have your personal or business credit history investigated. In line with this, lenders can also try to check with your merchant account beforehand, about the performance of your business, as this provides feedback on how credit is worthwhile.
What Should You Do To Achieve Merchant Status?
To prepare your business for an application, you need to be prepared to have all the information about your business handy, as well as your personal credit history. This includes how you get the necessary finances for your company and how you handle things in the company. Asking for a credit report for your business beforehand will also be a good move.
The most important thing is to make sure that you have maintained a favorable business and personal credit score for the lender to consider earlier. Pay your dues on time and avoid putting up large debts.
In your small business, creating a merchant account may seem unnecessary or too annoying at first, however, once you start accepting credit payments in your business, you will surely realize how much you can contribute to improving your business.
That’s not just by increasing sales, but you can also provide more convenience for your customers and even build your company. More importantly, accepting credit card payments will definitely increase cash flow.
In the end, once you see how your small business can grow by having certified merchant status, you will realize that all your efforts are really worth it.