Choosing to open a merchant account could be the best thing you ever do for your business to grow and for you to stay atop of your game. But choosing the right account provider can be sometimes hard. Some serious research is needed to truly make the best decision. But after you’ve opened it, how can you be sure you’re getting the most out of it? Luckily payment processing options such as Amex OptBlue can help you when it comes to improving your reach and getting the most out of your investment.
What Is A Merchant Account?
Todays’ society and commerce culture have evolved beyond the point of using only cash for transactions. Non-cash payment options have become the new trend that customers all over the world are using and merchants had to keep up with it. This is when a different kind of account was invented. According to https://www.investopedia.com/terms/m/merchant-account.asp, a merchant account is a kind of bank account that lets a business accept payments from both credit and debit cards. This type of account is created when a business, a merchant bank, and a card processor agree to the payments the business can receive.
The difference between how an account for a merchant works and how any other payment works is that when a payment using a credit card is made by a customer the money doesn’t go straight to the business bank account. They are first deposited into the merchant account and then transferred to the bank account. This transfer is usually done on a daily or weekly basis, depending on the amount of money or the volume of transactions.
Although not all businesses choose to open this kind of account, any online business that wants to accept credit card payments online will have to open an internet merchant account. This is because, even though the business could already have an account, processing credit cards over the internet usually involves other kinds of security measures and a special kind of account had to be designed. The fees for operating such an account could be a little higher than those of a regular one, but that is because the risk of processing payments over the internet is greater.
How Can You Get A Merchant Account And What Do You Use It For?
Although most brick and mortar merchants don’t need a special account to keep operating, the businesses operating over the internet have to have such an account to deal with the online payments. Even so, this type of account has become indispensable to most if not all businesses looking to remain relevant. These accounts are usually provided by merchant acquiring banks that offer electronic payment solutions. In today’s banking industry there are a lot of providers that offer services such as account setup or management.
Although there are a lot of options in terms of who to work with to set-up this type of account, providers don’t just give them out to anybody that comes knocking at their door. There is a rigorous process to deal with before you can start using your account. First of all, before approving your account, a provider could ask for:
• What type of business do you have and does it have a high risk of credit card fraud or returns?
• Experience in the business
• Business history events such as bankruptcies and others
• Previous merchant accounts owned
• Business owner's credit history and records.
If you’re new in the business world, you might have a higher chance of getting an account as a merchant if you use the same bank as you do for your one. Also, having previous accounts or other things that might make the bank think you’re a higher risk doesn’t automatically mean that you won’t get an account. It does mean however that the bank will probably charge you higher fees. But if your business takes off, and you prove to be a trustworthy client, those fees can be renegotiated.
What Is Amex Optblue?
In 2014 American Express launched Amex OptBlue . This is a processing option that gave any account provider the possibility to process American Express credit card payments. Until then, American Express payments were only processed by an American Express provided account. That meant that any business wanting to accept American Express had to have an entirely separate account just for those transactions. This is why many businesses didn’t accept American Express.
By creating OptBlue, the credit card giant joined fellow issuers Visa and MasterCard and made it simple for businesses everywhere to work with them regardless of the account provider.
This move made it easy to:
- Streamline payments and reconciliations by using one account provider;
- Have quicker payment by using the same schedule as other card issuers;
- Have a single bill with all the transactions in one place;
- Improved customer support for American Express related questions;
- More room for negotiating rates.
To put it simply, American Express used Amex OptBlue to become more appealing to merchants and encourage them to accept Amex payments.
What Are The Advantages Of Using Amex Optblue?
American Express wasn’t winning any favors with business owners in the past. That was mainly because the rates and fees charged by them were significantly higher than those of other credit card issuers. But everything changed when Amex OptBlue came out. This encouraged business owners to start accepting American Express payments again and account providers to offer better processing rates than before.
Some of the main advantages Amex OptBlue has brought with it are:
Price
Probably the biggest advantage of OptBlue is that it reduced the transaction fees significantly. Also, discount rates could now be negotiated instead of being automatically assigned as before according to your SIC Code. Businesses can now save thousands of dollars in processing costs making the Amex OptBlue one of the most merchant-friendly solutions yet.
Transparency
OptBlue is more transparent than the old AMEX ESA, allowing business owners to see how much American Express processing costs them.
Faster funding
The Amex OptBlue replaced the old American Express fund transferring period from 5 days to 1 day, making daily reconciliation easier.
