The cashless payments economy continues to grow with no signs of slowing down.
Looking to start an online or a brick-and-mortar business? If so, setting up a merchant account should be at the top of your to-do list.
In a nut shell, a merchant account enables the connection between the merchant, the Payment Service Provider (PSP) and the acquiring bank. It will allow you to process both one-off and recurring transactions.
3 key influencers
Factors such as business model, volumes and customisation will influence the type of merchant account you will require.
1.Business model – the nature of your product offering and the level of risk associated.
2.Processing volumes – the amount of monthly transactions as one of the guiding principles to calculating transaction costs.
3.Customisation – cashflow requirements and considerations in relation to monthly fees and settlement schedules.
Enabling payment acceptance
Depending on your business needs and the above-mentioned factors, the following options can be made available to you.
Aggregated merchant account (a.k.a. sponsored). Think of this as a “rented” merchant account. In most cases, this type of merchant account allows for a faster onboarding process, helping you to get up and running faster. In addition, it may reduce your up-front fees, saving you setup costs. However, depending on your business model, it may impose limitations on your processing.
Dedicated merchant account (a.k.a. direct). In line with the above reference, consider this option as a “privately owned” merchant account. When it comes to customised pricing and settlement schedules, a dedicated merchant account allows for more freedom and flexibility. In general, with a dedicated merchant account, payment page redirections are avoided therefore, offering a more consistent look-and-feel.
Taking the pain away
Setting up a new business can be challenging. The good news is that we can provide you with guidance to make informed decisions. Whether an aggregated or a direct merchant account, you will benefit from dedicated expertise so you start accepting payments sooner.