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What Is a UK Merchant Account?

A merchant account enables businesses in the UK to accept payments for services or goods via credit and debit cards.

Merchant accounts can be set up through your bank or through an Independent Sales Organization (ISO), both of which require a payment service provider (PSP).

The payment service provider authorizes and transfers your customer’s details to your merchant account provider. Once the transaction goes through, the PSP sends a confirmation to the card machine.

Some banks offering merchant accounts also provide this service but it is entirely up to you whether you opt for the bank's PSP or whether you find an independent provider.

You will need to bear in mind that both parties will charge set up fees and transaction fees but, more often than not, an independent payment service provider will offer much more reasonable rates than a bank.


Functionalities Of A Merchant Account

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PDQ Card Payments

merchant accounts card payments

Most merchant are interested in getting a merchant account for the fact that it allows them to take card payments. Credit and debit card payments are the most popular payment method among customers in almost any environment and people have even come to expect this option from sole traders, market stalls and other small vendors.

Setting up a merchant account lets a trader accept card payments, and many merchant account suppliers also offer card machines, so you will have no compatibility issues.

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Online Payments

merchant accounts online payments

In addition to being able to take card payments face to face with a PDQ machine, having a merchant account will also allow you to take payments online.

With a merchant account and a payment gateway in place, your customers can enter their card details into a checkout on your website or web shop and pay securely online.

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Security

merchant accounts security

Setting up a merchant account offers security in a variety of ways. It means that you can accept card payments, so you will have less cash to deal with. This means that there is less chance of your staff giving wrong change or pocketing cash, and less chance of cash going missing for other reasons. In the event of a robbery, there is less cash in your till that could be stolen.

There is also less chance of someone paying you with counterfeit bills or coins. Also, credit and debit card payments are checked by a secure payment gateway provider before being authorised, so you’ll know immediately if a customer’s payment isn’t cleared.

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Customer Satisfaction

merchant accounts customer satisfaction

Credit and debit cards are the payment method of choice for customers in most situations. Offering them the opportunity to pay by card will increase customer satisfaction and increase the chance of the customer returning.

Processing a card payment has become so easy and fast that it is usually quicker to pay by card. Accepting card payments means your staff can process more orders. This is especially important if your business is often busy. It also means that your staff won’t need to calculate customer’s change under pressure.

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Increased Sales & Profit

merchant accounts sales and profits

People are likely to spend more money when paying by card. This can result in increased sales for your business.

Many people will leave a store without making a purchase if card payment is not offered as an option. This is either due to a strong preference for card payment, or simply because they don’t have enough cash on them. By offering card payments you will no longer miss out on these sales.

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Reduced Bank Fees

merchant account reduced fees

When you have less cash to deposit, you can save on bank fees. Many banks will charge you higher fees if you regularly deposit very large amounts of cash. Depositing cheques also often leads to fees. While merchant accounts are also associated with fees, these could be lower than the fees associated with cash and cheque deposits.

Taking card payments with a merchant account could also mean that you can save money on your cash collection service, if you use one.

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What Is a Merchant Account Number?

A merchant account number is a number associated with the company's bank account and is issued by the merchant services provider. All electronic payments are streamed through this number until a transfer to the business account is requested. This is known as 'batching out'.

The merchant account number can be located in several ways. Each card terminal has a sticker on the side which states the merchant account number. Alternatively, it can be found on the monthly merchant account statement which is sent out by the merchant service provider. Additionally, a sales representative from the merchant services provider can locate the number from the company records if necessary.

A merchant account number is also known as the Merchant Account ID. Basically it identifies the business to financial institutions and card providers who process the payments, regardless of where in the world the business is, or the product or service they offer. The business name will also appear on the customer's credit card or bank account statement when the payment is processed.

Setting Up A Merchant Account

You will find that the majority of high street banks in the UK offer merchant account services but their fees are often significantly higher than an ISO.

It's well worth comparing different independent sales organizations to find one that suits your specific business requirements and budget.

Different merchant account providers will have a different focus and, accordingly, a different fee structure. Fees can depend on a number of factors including which types of cards you want to accept, whether you will have a minimum card charge and how many PDQ machines you will be using.

Find out more about different merchant account providers on our providers overview page.

Next Steps

To find out more about setting up a merchant account, and to get help choosing the right provider, simply fill in our smart web form at the top of the page. The questions are tailored to identify your requirements and you will receive quotes from up to four providers who match your business needs.

Finding the right merchant account provider has never been so easy. The service is completely free, so you can get started right away.

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