Import-export business models face some unique challenges. However, they appeal to some individuals trying to enter the business arena because there is a high-profit potential.
If you’re seriously considering becoming an importer-exporter, you should know that it’s not for the fainthearted. You often have to deal with unanticipated setbacks, and you must stay flexible at all times. You should also surround yourself with a savvy, intelligent, experienced sales force.
Apart from that, you need a way to process payments and move money around for operational expenses. Because of this, you’ll probably want to look into getting yourself a merchant account.
Let’s talk about what exactly that is, as well as how it can help you as you’re trying to establish and expand your import-export business model.
What is a Merchant Account?
Before we talk about how you can use a merchant account to streamline your global export-import operation, let’s make sure you understand what we mean when we mention this term. A merchant account is:
- A specific account type that not all banks offer
- An account that lets the holder accept credit card payments
In other words, once you’ve set up a merchant account, you can use it to process credit card payments for your services and goods. The bank or other entity with which you’ve set up the account takes a fee off the top. If you operate a reputable business, then those fees should be pretty reasonable.
What is an Import-Export Operation?
If you own or operate an import-export business, then:
- That often means you’re a kind of international free agent entrepreneur
- You usually have no specific client base
- You might not specialize in one product line or a single industry
As an importer-exporter, you’re a procurer. You must know where to find things, often in other countries, and ship them to those who want them. If you look at it in this respect, the job seems glamorous.
However, sometimes it is, and sometimes it definitely isn’t. An importer might have a client that wants them to get a particular kind of rare sheet metal alloy for construction projects. That’s hardly heart-stopping danger and intrigue.
On the other hand, maybe your client wants you to find and procure an extremely rare, limited edition Ferrari 1962 250 GTO, one of the world’s rarest vehicles. Tracking that down for them and setting up the buy will probably be a lot more exciting.
Why is a Merchant Account Good for the Importer-Exporter?
Just like every other industry where goods and services exchange hands, the importer-exporter needs a place to process their payments and store their money. Then, they can withdraw it for personal use or reinvest it in the business for operating expenses.
You need a financial entity that can help you with the job’s day-to-day operations. These might include purchasing goods from a private seller or a domestic or foreign manufacturer, then reselling, packing, and shipping them. All of that costs money, to which the importer-exporter must have ready access.
Selecting the Right Merchant Account
Most banks, credit unions, and other financial entities are happy to offer you all kinds of merchant accounts. As long as what you’re importing and exporting isn’t particularly high-risk, they’ll be eager to show you some different options.
As with virtually every bank account format, you’re looking primarily at the fee structure. How much is this bank or other financial institution going to charge to open the account?
What kinds of penalty fees are there for various actions you might take? Is there any fine print for which you need to be on the lookout?
You need answers to all these questions, but you also need to figure out if the entity you’re considering can handle the relatively new tech that some importer-exporters have embraced.
For instance, some accept various cryptocurrency forms now. There are more instant electronic payment formats than ever before, not to mention lightning-fast mobile payment processing.
You need to partner with a financial entity that offers a merchant account that can handle all of that. With this sort of tech changing so rapidly, you don’t want your merchant account scrambling to catch up.
Once you’ve picked out the right account, you should be in good shape. Now you can work on further cultivating your connections. You can earn a tidy profit every time you put something into an individual’s hands who wants it. This is an industry with plenty of expansion potential.