Understanding the concept of merchant services in current account

Posted on Friday, September 15th, 2023 | By Indusind Bank

In the dynamic world of business and finance, the concept of merchant services has gained immense significance, especially within the framework of current accounts. With the advent of technology and e-commerce, most businesses are shifting towards online mode.  

As India’s economy continues to grow and businesses embrace digital transactions, understanding merchant services and their role within current accounts becomes crucial. Let us find out the intricacies of merchant services, their significance and their impact on the Indian business landscape. 

Defining merchant services 

Merchant services encompass a range of financial solutions provided by banks and financial institutions to facilitate electronic payment processing for businesses. These services will enable your business to accept payments through various channels such as debit cards, credit cards, and digital wallets, etc. Merchant services effectively bridge the gap between consumers and businesses, thereby creating a seamless transaction experience for both. 

Components of merchant services 

Merchant services involve various components to make a transaction successful. These components include: 

Point of Sale systems 

The Point of Sale (POS) systems are the physical or virtual terminals used by businesses to process payments. These systems can be in the form of card-swiping machines or integrated software solutions. Such modes will allow your business to accept payments directly from customers’ cards or digital wallets. 

Payment gateways 

Payment gateways are online platforms that facilitate e-commerce transactions. They encrypt sensitive payment data to ensure secure online transactions. Payment gateways are vital for businesses that operate in the digital space. 

Payment processing 

Payment processing involves behind-the-scenes actions required to validate, authorise and settle transactions. This includes verifying the availability of funds, confirming the legitimacy of the transaction, and transfer of funds between two accounts. 

Merchant accounts 

A merchant account is a specialised type of bank account that allows businesses to accept payments from customers. This account will hold the funds received from credit and debit card transactions before they are transferred to your main account.  

If you choose the right account, you can have a common current account supporting merchant services. For instance, the Indus Merchant Plus Current Account from IndusInd Bank allows you to obtain merchant services under your current account. This will save you from the hassle of managing multiple accounts. 

Significance of merchant services in India 

Merchant services have gained immense significance in India’s rapidly growing digital economy. As more and more businesses are getting online, merchant services have become paramount for digital current accounts. Here are the key reasons behind their importance: 

• Facilitating cashless transactions: Merchant services play a pivotal role in driving the adoption of cashless transactions. As India continues its journey towards becoming a cashless economy, these services will provide your business with a tool to seamlessly accept digital payments.
• Business growth and customer satisfaction: By offering multiple payment options, your business can attract a wider customer base. This will foster your customer’s satisfaction, besides contributing to your business growth by making transactions more convenient for consumers. 
• Economic inclusion: Merchant services promote economic inclusion by allowing small businesses and startups to participate in the digital economy. Even if you are a micro-entrepreneur you can accept electronic payments. This will expand your reach beyond cash transactions. 
• Enhanced security: Merchant services prioritise security through encryption and fraud prevention mechanisms. This will enhance trust between your business and consumers as electronic transactions are safer. 
• Data insights and analytics: Merchant services often come with analytics tools that provide businesses with insights into customer behaviour, transaction patterns and sales trends. You can leverage this data for strategic decision-making. 

Integration with current accounts 

Merchant services are often integrated into current accounts, especially for online businesses. This integration will allow you to seamlessly manage your funds as payments from electronic transactions are directed to your associated current account. Additionally, you can access transaction histories, settlements, and financial reports through your current account interface. 

Thus, it is important for businesses in India to choose the right type of current account with merchant services. You need to consider various factors including transaction fees, setup costs, ease of integration, security features, customer support, and compatibility with various payment methods. In the present digital space, you can open a current account online following just a few steps. 

In a nutshell 

Merchant services have become a cornerstone of modern commerce, transforming the way businesses transact and consumers pay. In the Indian context, these services hold immense potential to drive financial inclusion and boost economic growth and digital transactions. 

If you are looking to thrive in India’s digital economy, you must understand the nuances of merchant services and their integration with online current accounts. As the landscape continues to evolve, your business must embrace merchant services that would help you reap the benefits of a dynamic and interconnected financial ecosystem. 

But do all types of current accounts integrate merchant services? The answer is no. Then which merchant service current account is best for your business? 

The Indus Merchant Plus Current Account offers the benefits of merchant services in the current account. It is exclusively designed for retailers, traders and merchants who are willing to avail of the POS/PG/QR code facility. Following are some of the key benefits of the Indus Merchant Plus Current Account: 

• Nil average monthly balance requirement
• Free RTGS/NEFT/IMPS facility 
• Free local and outstation cheque deposits in the IndusInd Bank location
• Free cash deposit facility up to ₹ 3 lakhs per month at the base location 
• Free PO/DD up to ₹ 25 lakhs payable at IndusInd Bank branches 
• Variety of debit card options and many more features. 

With IndusInd Bank, you do not need a separate current account and merchant account. Apply now for the Indusind Bank Current account. 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.