Merchant Banking 101: All You Need to Know About It


For budding entrepreneurs, sustaining a business built from scratch is challenging as they often face losses. However, with time, and strong planning and implementation, the business can kick off, and profits will start to pour in. Banks and other financial institutions have launched various merchant services to help new-age entrepreneurs and support small and medium-sized businesses to grow. 

As a new business, if you are considering opting for merchant banking, you have come to the right place. Let’s tell you everything about merchant banking and how your business can benefit and make profits. 

Decoding Merchant Banking 

Merchant banking is a service offered by banking institutions to help SMEs sustain and profit. They serve merchants from different regions and business models and do not differentiate based on the product a merchant is selling. Their crucial motive is to help the business with the right solutions to help them grow and become profitable. Here are some of the key services that merchant banks offer: 

  1. Point-of-sale (POS) terminals: Banks offer POS terminals that allow businesses to accept credit and debit card payments. These terminals are connected to the bank’s network and enable companies to process transactions in real-time.
  2. Mobile POS: Some banks offer mobile POS solutions, which allow businesses to accept payments using mobile devices, such as smartphones or tablets. This is becoming increasingly popular as it will enable small businesses to accept payment on the go.
  3. Online payment gateway: Banks offer online payment gateway solutions that allow businesses to accept payments through their website. Customers can enter their credit or debit card information on the website, and the transaction is processed through the bank’s payment gateway.
  4. Virtual terminal: Some banks offer virtual terminals that allow businesses to process credit and debit card payments through a web-based interface. This is useful for companies that do not have a physical storefront or take orders over the phone.
  5. Multi-currency support: Many banks support multi-currency transactions, which allows businesses to accept payments in multiple currencies, such as USD, EUR, GBP, etc. This can benefit companies that operate internationally or sell products or services to customers in other countries.
  6. Reporting and reconciliation: Banks provide detailed reporting and reconciliation features that allow businesses to track their transactions and reconcile their account.
  7. Technical Support: These banks offer technical support to merchants for any issues related to their merchant services.

Banks offer a wide range of merchant banking services that allow businesses to accept and process electronic payments. These services include POS terminals, mobile POS, online payment gateway, virtual terminals, multi-currency support, fraud protection, reporting and reconciliation features. These features help businesses to handle and manage their transactions quickly and securely.

How Can Merchant Banking Services Help SMEs? 

In case you are wondering how merchant banking services can help your business, read this: 

  1. By accepting electronic payments, such as credit and debit card transactions, businesses can increase revenue by making it more convenient for customers to pay. This can also help increase sales, as customers are more likely to purchase when they can pay with their preferred payment method.
  2. Merchant banking services can help small and medium-sized businesses manage their cash flow more effectively by providing real-time access to funds and reducing the need to wait for checks to clear. This can be particularly beneficial for businesses that operate on a cash basis, such as retail stores.
  3. Merchant banking can help businesses improve customer satisfaction by providing a more convenient and efficient payment process. This can also increase customer loyalty, as customers are more likely to return to a business that offers their preferred payment method.
  4. The merchant banking services offered by banks typically include fraud protection features, which can help businesses identify and prevent fraudulent activity. This can reduce the risk of financial losses for the company and increase customer trust.
  5. It can help businesses keep track of their transactions and reconcile their accounts more efficiently by providing detailed reporting and reconciliation features.
  6. It can be cost-effective for small and medium-sized businesses as they don’t have to invest in expensive payment processing equipment or software.
  7. Merchant banking services offered by banks typically include mobile POS solutions, which allow businesses to accept payments on the go; this can be particularly beneficial for small and medium-sized companies that operate at different locations.

Merchant banking offers protection against the high risk merchant services and keeps you and your business safe throughout. 

Which is the Best Merchant Service for Small Business? 

Now that you are aware of the merchant banking services, you are ready to pick the best merchant services for small business. HDFC Bank offers the SmartHub Vyapar App that offers all the above mentioned features. From instant onboarding to accepting payments from different modes and advertising your business, you can do it from just one application. Download the HDFC Bank SmartHub Vyapar App today and embark on a journey to make your business flourish!



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