Now You Can Establish an Internet Merchant Account for Your Online Business


Your online business deserves every advantage you can give it to grow and thrive against competitors, both on the web and off. One of the simplest, most economical ways to achieve your goals is through establishing an Internet merchant account that will allow your business to accept credit cards.

Perhaps more than any other type of business, it is critical for online businesses to accept credit cards as a valid for of payment. Since more than 90 percent of online shoppers use credit cards to make their purchases, by not accepting these ubiquitous cards, you run the risk of limiting your customer base and even driving yourself out of business.

While opening a merchant account is an obvious step for many online retailers, other businesses on the web are hesitant to establish accounts. The following guidelines will help dispel some of the myths surrounding Internet merchant accounts, and can help you decide if opening an account is the right step to take for your online business.

What is an Internet merchant account?

Like other types of merchant accounts, an Internet business account allows your online business to accept credit cards, debit cards, and ATM cards as forms of payment. Internet merchant accounts employ special features to help limit the higher risk of associated with doing business in an anonymous online environment.

What kind of equipment do I need?

Unlike a retail account that requires a physical point of sale (POS) terminal to collect credit card data and process transactions, an Internet merchant account gathers data electronically through your website’s shopping cart system. There are two types of Internet merchant accounts: real-time systems and delayed processing systems.

In a real-time system, once a customer enters his or her credit card information on your website, that information is transmitted to the credit card issuer via a special service provider called a gateway.

The gateway offers additional security features, such as address verification, and helps reduce the incidence of fraud. Once the transaction information is received by the credit card issuer, it is authorized and a transaction number is assigned.

The gateway transmits the approval – or a notification that the transaction has been declined – back to the website and, for approved transactions, an electronic receipt is issued.

At the close of business, the merchant account collects transaction information for that day, deducts any applicable fees, and transfers the appropriate amount of cash from the credit card to the business bank account. This is the most common type of Internet merchant account, and the one most familiar to both business owners and consumers.

In the delayed processing account, credit card information is still entered via your website, but rather than being instantly processed, the information is stored for later processing, usually at the end of the business day.

At that time, a business employee collects the data from the account and enters it manually into the store computer. From that point on, the processing steps are the same. Because it relies on an actual person to enter each individual transaction, this type of account is best only for small businesses doing low daily sales volumes.

Mail order and telephone order businesses often use delayed processing systems. Because there is less reliance on the merchant account provider and gateway provider to handle transactions, delayed systems are almost always associated with lower fees and costs.

What fees are involved?

Depending upon the type of account you select, your fees will vary. Basically, all merchant accounts can expect to see two types of transactional fees: one based on the amount of an individual transaction, and one that is the same for each transaction.

In addition, your account will likely have a daily fee that covers the cost of transferring funds and maintaining bookkeeping activities associated with your account. Most accounts also have monthly fees, and some still maintain an annual fee. Some account providers charges fees for the reports they issue.

You can also expect to pay an additional fee for your gateway provider, which may or may not be provided by your merchant account service provider. If the merchant account does not include its own gateway provider, it will be up to you to select one. Be sure to ask your provider for a complete list of all fees before signing your contract.

What do I need in order to apply?

For any merchant account, you will need to have a business license and a business bank account. This bank account will receive all of the proceeds from your credit card sales. Of course, you’ll also need a website with a shopping cart system installed.

Merchant accounts are an easy, affordable solution for your online business that can have you competing with big corporations in no time. Take some time today to explore your options and take the next step toward growing your business.