As more and more trading and financial transactions are carried out online, many are wondering what constitutes a merchant. What it is? A merchant is a bank account specifically designed to pay for goods and services purchased in an online store.
This concept appeared about 10 years ago, and it is associated with the Internet and electronic payments. This system is convenient for buying goods in online stores. Agree that for purchases on the network it is inconvenient to pay in cash (cash on delivery is relevant only when the goods are delivered by courier). But to pay for purchased goods through a particular Internet merchant is the most convenient way.
It is also worth noting that this concept is borrowed from the Latin language and means “wholesaler”, “seller”. There is a consonant word in Russian, though it carries a negative meaning (“mercantile character”), but also implies something related to trade. But the word merchant has no negative notes, because the program is not live.
Trade and merchant: what is it?
The world is developing rapidly. Today it is becoming increasingly profitable to purchase goods and services on the Internet. A merchant allows the seller to transfer money without leaving home. It is also easier for sellers to use it. They not only advertise their goods and services, but also sell them on the Internet.
And practically what is it - a merchant in a transaction? Using such an account, a person can pre-buy a plane ticket, book a hotel room, pay fines and make other payments.
Merchant Account
Merchant account - a service designed to make payments by customers from Visa, MasterCard, American Express and others. Having such an account, you can carry out a thousand transactions per minute.
With Merchant, you can sell programs, movies, contacts, and more. You may not have known, but this service is used in settlements in the WebMoney Transfer system and PayPal.
There are currently two types of merchant accounts:
- Bank card "with you". This type is used by reading information from the card using special equipment (POS terminal or imprinter).
- There is no bank card. You use this type when making a purchase through an online store, for example, without leaving your home. In this case, all information is entered in the payment form. This also includes merchants of payment systems.
System benefits
Let's now take a closer look at the advantages of the merchant service (and what it is, in more detail):
- Firstly, you can immediately pay for the purchased goods, anytime, that is, round-the-clock service.
- Secondly, as mentioned earlier, you can carry out a huge number of operations in minutes.
- Thirdly, there is no currency control.
- Fourth, transactions are confidential.
And another point, which is both an advantage and a disadvantage, is that having such an account, you can engage in uncontrolled and tax-free business around the world.
How it works?
However, you must pay for opening and maintaining a merchant account. Therefore, before you start it, you need to deal with the costs that you will incur. When registering an account, you need to pay a registration fee from $ 200 to $ 500. A monthly discount rate of 2.5 to 7% of sales is paid. A transaction fee of 10 to 50 cents per transaction is paid. If the discount rate has not reached the agreed amount, then a minimum fee of $ 20-30 is paid monthly. If you have a risky business, then you need to create a reserve fund.If a refund is made, then the operation is paid from $ 10 to $ 25. Banks charge a reporting fee of up to $ 10, but not all.
A merchant account is issued only to a legal entity, and the requirements for opening it are very high. The procedure is carried out only in the bank, and it is very long. Today, there are companies that are involved in this process.
The legal entity must be registered and have a website through which payments will be made. The requirements for it are very stringent. It should contain information about goods and services, and all payment options are indicated. Prices must be true. It should also be described in detail how to place an order, conditions for exchange and refund. Rules for the provision of services, options for the delivery of goods are required. There should also be a section for registration, user authorization. The site should be on a paid hosting, pages in the same domain zone.
Logos of payment systems through which operations are carried out by the company must be placed on the main page. Only on the pages of the processing center, which are well-protected, can you request bank details of users. The company must have an account with a reliable banking institution.
In addition, merchant acquiring must be present. What it is? This is a method of payment for certain bank cards, which is simply necessary in modern conditions.
How is such an account opened?
When opening a merchant account in the bank, it is necessary to provide all corporate documents, information on sales volumes and an approximate amount of one payment, personal information of the company owners, information on the procedure for returning paid funds.
The bank must send a package of documents with a contract for signing, if a decision is made to open an account. One of the signed copies is sent back to the bank. After this, the financial institution should issue a merchant ID and all the information necessary for further work.