Why Businesses Need a Merchant Account

Most people who have an interest in business have heard about a merchant account, but it’s about more than just taking and receiving payments. A merchant account is what enables a business to deal with customers that want to make electronic purchases, like someone utilizing ecommerce to sell t-shirts online. Now, more than ever before, having a merchant account is a necessity.

The Rise and Fall of Cash-Only Businesses

According to the United States Small Business Administration, cash-only businesses do still exist but they come with several downsides. For one, a cash only business is a major target for theft in the community. These businesses also need to file special forms with the IRS for transactions that exceed $10,000. It’s also highly impractical for managing one’s finances. Cash-only businesses tend to lose customers who don’t have enough cash on hand to pay, which reduces the potential business they could otherwise do.

Most retailers have switched from cash only to merchant accounts, which give them far greater security. Merchant accounts encrypt information for transfers, which protects both the customer and the seller, and enables a safe medium for exchange.

Retailers also have far more choice today than they’ve ever had before. There are major players in the market, especially names like Visa, but more choice exists because retail requires flexibility. Many retailers, for example, run both an on and offline component to their business.

Merchant accounts also make loyalty and gift card programs a possibility. Cash businesses, conversely, hurt loyalty and put customers and staff at risk for theft.

Bio: Firoz Patel is the founder of AlertPay Inc., and currently oversees development of the Payza platform. For more than ten years, Firoz Patel has been a globally recognized name in the world of online payment processing.