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Take Payments Without a Merchant Account

BAMBORA OPINION

27 August 2020

6 minute read

In the past, businesses that wanted to accept credit card payments had to set up a merchant account through their bank. A merchant account is a specific type of bank account that allows businesses to accept payments, but it does come with drawbacks - the fees tend to be high, and the underwriting process can be quite demanding. But did you know about the alternative for your business? Most businesses can benefit from forgoing a merchant account, and choosing the PayFac model instead.

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It’s never been more critical for businesses to have a way to accept online payments. By leveraging the right payment tools, you can accept credit and debit card payments from customers all over the world.

In the past, businesses that wanted to accept credit card payments had to set up a merchant account through their local bank. A merchant account is a specific type of bank account that allows businesses to accept payments, but it does come with drawbacks.

The fees tend to be high, and the underwriting process can be quite demanding. That’s why most businesses can benefit from forgoing a merchant account, and choosing the PayFac model instead.

This blog will discuss the difference between setting up a merchant account and the PayFac model. It will also explain why the PayFac model is the better choice for most small businesses.

WHAT IS A MERCHANT ACCOUNT?

A merchant account is a type of bank account that allows businesses to accept credit and debit card payments. When a customer buys your product or service, the money is deposited into the merchant account, and from there, transferred to your business bank account.

It sounds pretty simple, but setting up a merchant account is not easy. Banks don’t want to issue merchant accounts to high-risk vendors, so you’ll have to go through a rigorous application process.

Before issuing a merchant account, banks will consider the following information about your business:

  • How many years you’ve been in business
  • The type of business you run
  • Whether your business comes with a high risk of credit card fraud
  • Your personal credit history
  • Any previous merchant accounts you’ve held

If your business is considered risky, this doesn’t necessarily mean your application will be rejected. But you will likely end up paying higher transaction fees to accommodate for the risk.

But even if your business isn't identified as high-risk, you'll still likely end up paying a number of fees. This includes things like application fees, setup fees, per-transaction fees, and more.

HOW TO ACCEPT PAYMENTS WITHOUT A MERCHANT ACCOUNT

If setting up a merchant account sounds like a lot of work, that’s because it is. Fortunately, there is an alternative where you can forgo a merchant account altogether by choosing the payment facilitator model (PayFac).

With a PayFac model, your business will sign up as a sub-merchant to start accepting credit card payments. You still get to enjoy the benefits that come with a merchant account but without the hassle that comes with setting up the account.

This is especially helpful for small businesses, which don’t usually have the bandwidth to spend time worrying about how they’ll accept credit card payments. Let’s look at some of the most significant benefits of the PayFac model:

Easy online signup process

When you utilise a PayFac model, like the one offered by Bambora, there’s no need to set up a merchant account through your bank. Instead, we’ll facilitate and process payments for you, and you’ll receive access to our pre-negotiated, less expensive rates.

Setting up a merchant account can be quite tedious, but the PayFac model is much simpler. We provide an easy online application process and digital signup process for all merchants.

And once you apply, you’ll receive 24/7 support throughout the application process. But our goal is to move you through the application process as quickly as possible. That way, your business will be up and running and ready to accept online payments.

Keep your current bank account

Thanks to Bambora’s relationship with banks and acquirers, you’ll be able to maintain your current bank account. You’ll never be asked to switch bank accounts or set up a new account. We provide a 1:1, dedicated service to make this process as seamless as possible.

We’re backed by some of Australia’s biggest banks to provide you a secure and reliable service. We deal with the banks, so you don’t have to, and work closely with all schemes to provide a secure solution.

Know your transactions are secure

When you use the PayFac model, you’ll have the peace of mind knowing your transactions are secure. Since you’re only considered a sub-merchant, you won’t be taking on as much of the risk.

You also won’t have to worry about being PCI compliant, and instead, can leverage our PCI-DSS compliance. Bambora has a long history of PCI compliance, and we are recertified on an annual basis.

By choosing the PayFac model, you’ll save yourself from having to deal with compliance issues. The master merchant is responsible for identifying and stopping fraud and dealing with chargebacks as well.

Focus on your business

And finally, choosing the PayFac model and signing up as a sub-merchant is going to save you quite a bit of time. And when you’re a small business owner, time is a precious resource.

Instead of jumping through hoops when it comes to compliance issues or dealing with chargebacks, you’ll be able to focus on the core competencies of your business. You can work on running and growing your business and let us worry about payment solutions.

Bottom Line

If you need a way to start accepting credit card payments immediately and don’t want to go through the hassle of setting up a merchant account, then the PayFac model is a good choice for you.

We’ve already done the hard work of getting set up as a master merchant. This means you can leverage our long history of secure transaction processing.

At Bambora, we provide customisable solutions for any type of business. This includes things like:

  • Easy reporting and user-management
  • Uncomplicated merchant statements
  • 24/7 Australian-based customer service
  • Access to other payment channels like IVR, SDK, and SMS

We really are a one-stop shop for all your payment needs. Feel free to get in touch today and learn more about our unique payment solutions.