Finance: What is a Merchant Account?

A merchant account is a banking account owned by...a merchant, i.e. someone selling something. Or just someone with a few grand in the bank and decent credit.

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Transcript

00:22

hundred bucks Alright Well where does that money go How

00:24

does it get there Well because you pierce on earth

00:28

have a merchant account you take her little mag strip

00:32

thing Me on her card with all our information has

00:35

everything on it like her name bank number address phone

00:39

a whole bunch of other codes on it You swipe

00:42

it in your little reader and voila Three hundred boxes

00:45

taken from her account with visa taking about five bucks

00:49

of this transaction for the pleasure or pain of doing

00:52

it And then visa room it's two hundred ninety five

00:55

dollars into your bank of america merchant account that's How

01:00

you got paid So who gets a merchant account Do

01:04

you need a fundamental genetic resistance teo Kryptonite to be

01:08

granted such lofty status No not at all Generally speaking

01:13

all you need is a few grand in a basic

01:15

bank account Reasonable credit scores like above six hundred ish

01:19

And you have to be willing to fork over some

01:21

minimum initial amount as well as minimum monthly amount So

01:25

it's still worth it for the credit card companies and

01:28

banks to continue to be in business with you like

01:30

there's A basic monthly fee for most of them Well

01:33

how do you lose your merchant account status Well you

01:36

offer lousy product to your customers who demand their money

01:39

back through charge cards in what's called a charged back

01:43

like they dispute the charge and make the credit card

01:46

company go after you for the refund And that then

01:49

violates some minimum few percent floor from a credit card

01:53

taking perspective and well then visa mastercard amex will They

01:56

could just stop issuing you a credit taken stopped taking

02:00

customers cards from you and then you have to only

02:03

take cash You're screwed But as long as you follow

02:05

the rules pay your bills and continue to attract creative

02:08

people who want piercings in you know interesting places like

02:12

the mall Then you'll remain in business for a long

02:14

as you want more or less and well so that's

02:17

It You're one of the few the proud the merchants