If you are a business owner, then you need revenue to run your business because you need to pay your employees, vendors, and so on. You also need to collect money from your customers. Additionally, nowadays, more and more consumers are shifting towards online payment due to its convenience. Hence, you need to set up a upi payment app with the help of a merchant account. Here, let us discuss more about merchant accounts and collections.
What is a Merchant Account?
A merchant account is a commercial account that helps facilitate online business transactions. It allows businesses to accept card payments, digital wallets and UPI transactions. You can also pay your distributors and vendors with a merchant account. You also get access to several other perks besides payments and collections, such as internet banking, rapid loans, credit card facilities, and overdraft capabilities.
How Does a Merchant Account Work?
Merchant Accounts are similar to Current Accounts in that they allow you to make payments and have an overdraft. However, understanding how the payment collecting portion of a Merchant Account works is important. When a customer pays for your goods or services at a terminal, the transaction details are transmitted to your Merchant Account. Your bank, which holds the Merchant Account, will forward those details to the customer’s card issuer. They will determine whether the customer has enough funds in their account to cover the transaction. If the customer’s account does not have enough funds, the card provider will decline the transaction and return the details to the payment terminal. When the customer has sufficient funds, the transaction amount is sent to your Merchant Account from their bank. Remember that this transaction takes only seconds.
Types of Merchant Account
Retail: Brick-and-mortar retail establishments, such as general grocery stores, goods stores, pharmacies, clothes stores, hotels, restaurants, etc., can use a Retail Merchant Store. Your debit or credit card will be swiped by the cashier using card terminals provided by the bank. Generally, banks charge low application and setup fees in locations with more transactions. You may also let clients pay using the UPI payment app by providing QR code scanning services.
E-Commerce: There is an increase in online shopping nowadays. You may be losing a big portion of your clientele if your business does not take online payments. Your bank can set up an online payment system. Consumers can independently enter their credit card, debit card, and upi payment app information and make payments to your company.
How to Apply For a Merchant Account:
You must first find an acquiring bank to apply for a Merchant Account. Essentially, these banks handle consumer payments on your behalf. Once you have found an appropriate acquiring bank, you must submit the necessary paperwork, such as:
- Certificate of Incorporation
- Registration Certificate
- Shop Establishment Act Certificate
- Goods & Services Tax (GST) Certificate
- Business Permanent Account Number (PAN)
- Latest utility bills
The banks will conduct due diligence to look for fraudulent activity, determine the business’s operating history, and examine its bankruptcy history.
Final Thoughts
This read has provided you with enough knowledge about merchant accounts. A merchant account allows customers to pay bills even from their 0 balance account. Hence, you can open a merchant account and make a seamless transaction with QR code scanner.
