Should I open up a Merchant Account for my Business?
I remember it like it was yesterday. I finally got up the courage to do it, so I sat down and registered my own business in the state where I live. I cut the cord, left the office, went out on my own… and had no idea what I needed to do to be able to accept payments when the time came.
Maybe you had it all figured out before you made the leap, but I just made the leap and then started to ask some of the more important questions. So, there I am with my first paying customer, and they want to make payment with a credit card. Somewhere in the back of my mind, I knew that day would come, but boy was I not prepared for it.
So, I’m left to ponder the eternal question of the business owner. Should I open up a Merchant Account for my business? Should I accept credit cards or can I make it as just a cash only business.
I quickly learned that opening a merchant account is one of the easiest ways to run a more productive business as well as reduce the everyday hassle of accepting payments. My merchant service account helped me to produce more revenue and cut a bunch of the hassle of accepting payments. Below is my list of reasons why I’m glad I opened up a merchant account, so let’s take a gander.
Reasons to open a merchant account:
- It’s a well known fact that it costs a percentage of the money coming in to process credit cards. My real question was, “Is the investment worth it?” On average, my first merchant account cost me between 2 & 3 percent more to accept credit cards. What I found though, was that my customers spent more when they had credit cards as a payment method. I estimate that I saw around 15% more money spent by my customers when they paid by a credit card. In the early days when I accepted only cash, I watched customers consistently downgrade their services because of my available payment methods.
- Offering many different payment methods to customers is always a great idea in my book. I found that many customers were like me and just didn’t carry cash most of the time. These customers were just like me and used their credit and debit cards for all of their purchases. Before I setup a merchant account for my business, I lost more business than I want to admit to my competitors. I wish I had those opportunities back not only because of the missed income, but also because of the missed recommendations and referrals early on in my business.
- I used to spend a lot of time processing all of my client and customer payments. Now it’s easy breezy. Customers now just swipe their card or hold their phone close to my POS System and I get paid the next day. It takes me half the time to run a transaction and it’s all tracked in the system which makes end of the day reporting so much easier.
- I learned that accepting credit cards can build trust in the business. Early on in my inaugural year, I was introduced to the idea that Visa, MasterCard, Discover and AMEX all offer buyer protection if a transaction go poorly. By accepting credit cards, I was letting my customers know that I wanted them to have that extra support and security offered by accepting credit card transactions.
- Here’s something I didn’t initially realize since I didn’t have a traditional brick and mortar business. Credit cards are truly much safer for our business than cash. Have you ever heard of a thief holding up a business to steal credit card numbers? Thieves know they wouldn’t be able to get the numbers from our point of sale or credit card systems. Carrying large amounts of cash from your business to the bank every day on the other hand does invite certain undesirables, and is it worth the risk?
Merchant accounts may bring other advantages as well. Some merchant accounts allow you to take advantage of web-based reporting. Analyze your sales data and make more informed decisions on how you run your business.
Think about tax time and balancing your budget to preparing your taxes. When you own your own business like we do, this is an ongoing process. The easier it is to see our financial history, the faster and more accurate our accounting process can become.
So, why open a merchant account? The real question is why wouldn’t you open a merchant account?
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