Online merchant accounts processing and solutions
What is a merchant accounts? A merchant account is one of the integral parts of doing business online. It is a separate entity from your bank account but just like your bank account, it is a payment processor. Any payments you receive for your products or services from all your card purchases first go into your merchant account before the bank transfers the same to your bank account.
We have many payment methods everywhere today. The advancement of technology has seen many people use their smartphones as some of their preferred methods of transacting sales and purchases. Others use gift cards as their choice. They are all great methods but many people nowadays find it more convenient to use credit cards. If you are running a business, you have to pave way for people to use their credit and debit cards as a means of payment. This goes for online businesses too. If you need easier ways to sell your products physically from the comfort of your website, you need to go to your regular business bank and sign up for a merchant account or look for a trusted merchant account provider.
In short, a merchant account is an intermediary between you and the bank you transact your businesses with every other day. The account is set up using a credit card processor known as an acquirer or an acquiring bank. Only after you have set up a merchant account can you go ahead and accept debit and credit cards after you have a go ahead from the issuing bank or credit card networks. To make it easier to understand, think of a merchant card as your funds storage area. This is for all the sales funds collected by means of debit and credit cards. When someone purchases something from you using their card, the transaction goes through processor authentication before moving the funds from the account of the customer to your merchant account. What follows is a waiting period before the funds move from your merchant account into your usual bank account. The waiting period depends on various processor policies.
How to set up a merchant account
Setting up a merchant account is not difficult. It is however not a decision you should jump into without carrying out enough research. The merchant card plays a big role in your online business transaction because it is your means to accept electronic payments. It is therefore very important that you carry out enough research first to find the right merchant card processor for all your online payment needs. You can do this by carrying out a Google search or get recommendations from your friends and fellow business colleagues. Whichever place you prefer to get your recommendation from, make sure you read the reviews about your choice of the processor to make you feel comfortable.
You also need to understand that you can get your merchant account from different entities. Some banks offer an instant merchant account as part of their services but if your bank does not have the services, you can get your merchant account from elsewhere. The next best place would be from an organisation that offers merchant account solutions, also referred to as an independent sales organisation.
You can also get the same instant merchant account from merchant account sales providers. Of the three, the best credit card merchant accounts providers to work for would be the merchant accounts providers and the independent sales organisations. This is because they offer other merchant services like merchant cash advances and loans that can help to boost your business.
Criteria to consider when choosing your business merchant account provider
The following additional information will help you in choosing and going with the most trustworthy business account provider if you are looking for a quick merchant account:
- Reviews and reputation. Many merchant account solutions providers put on a lot of captivating information on their sites in order to capture as many clients as possible. Do not go by what you read, but dig further for reviews about the provider from trusted sites. The things you should look out for are reviews about their customer care quality, how they handle disputes and chargebacks and the speed at which they handle their payouts.
- Merchant account rates. Merchant account rates are what set many merchant account providers apart. This is the main area of competition so make sure not to go with the first provider you think has the best account processing rates. You will find others with better rates if you shop around depending on the type of your business, the volume of your transactions and the average size of your transactions. Look for a merchant account provider that charges you the basic rates set by the major credit card companies. Their fee per transaction should be minimal.
- Customer support. Being an internet merchant account holder, means your business hours do not have to be necessary the usual 9 to 5 working hours. You therefore need to look for a provider that can offer their services at any time you want customer support should not only be during the day but should extend to after hours. Check if your provider is easily accessible via email, chat or phone. If the provider is not easily accessible, you may want to look for another one because you need support at all times when you need it.
- Agreement contracts. It is necessary to sign a contract agreement with your merchant account provider. Go through the contract and make sure that everything laid down is something you are comfortable with and can work well with. Check for any early termination and cancellation fees indicated in case you want out of the contract.
- Compatibility of the hardware models. You will need more than just a merchant account for debit and credit cards. You will need a point of sale (POS) electric cash register or a credit card reader. Make sure the hardware you choose and your merchant account are compatible. Anything less than that means your card transactions will not go through.
- Online merchant accounts. An ecommerce merchant account is very necessary if you want to leap into online selling. Make sure that the online merchant account you get supports all your online payments. To make this even easier, you will need a payment gateway that will allow you to process all your transactions with instant online approval. This is how payment gateway works.
A customer buying your products or services online, logs into your site and enters their card details. The payment gateway then sends the customers card information to customers issuing bank and to your credit card merchant account processor. After the transaction approval, the information goes back to the payment gateway. From here, your online store can finalise the sale with the customer.
What are the requirements for setting up a merchant account?
Before signing up for your merchant account, there are some requirements you need to take into consideration. These are requirements you should meet for a successful merchant account sign up. . Underwriting Every merchant provider takes on a big risk in offering merchant accounts. In some cases, some customers may want refunds before the end of their contracts. The provider therefore has to come up with the refund even before making any profits from the customer. To avoid such incidents, known as the chargeback process, the merchant account provider has to review all the business details of the customer, in a process known as underwriting.
The business details that interest the providers more are:
- age of the business;
- customers credit score, and the product offers.
This allows the provider to determine the risk involved before offering the account. This should however not put anyone down because majority of the merchant providers offer high-risk merchant accounts because they understand businesses can be risky.
You need to be PCI compliant
Being PCI or Payment Card Industry compliant is essential if you need more security in processing your payments. It is not mandatory to be PCI compliant when signing up for your merchant card. However, if you start accepting your payments electronically, then there you need to be compliant. This will also make providers give you an upper hand when they are carrying out their underwriting process.
Licence and business bank account
If you are opening up a start-up, most probably you do not have a business licence or a business bank account. If you are already established, then no doubt you have them for you to get a merchant card, you need to have both the account and license in place.
Types of merchant accounts
Merchant accounts are in two main categories based on card information collection. The two categories are swiped and keyed. These two are the basic methods used by most businesses with merchant accounts for card information capture. The two categories are further divided into sub-categories:
- Swiped category
Swiped merchant account holders interact with their clients directly. The clients offer their cards for physical information capture as they wait. This could be either through a point of sale system or through a terminal. Swiped sub categories are:
- Retail merchant account holders
Retail merchants are the most common category of swiped accounts. This is because retail merchants mostly conduct all their businesses with direct interaction with their customers. They have face-to-face interactions where they swipe the customer’s cards through either a point of sale system or a terminal.
- Restaurant merchant accounts holders
This swiped account allows the restaurant merchants to add tips on top of the restaurant charges. They use a tip function that gives them authority to adjust the normal charge to include a tip on top.
- Lodging merchant account holders
In this category, lodging merchants have the authority to adjust a customer’s card for a specific sale amount. They then adjust the sale amount depending on how long the customer stayed and authorises the payment in a day or two later to include taxes and any other additional fees
- Mobile or wireless merchant account holders
Mobile merchants can authorise cards from any location. They use a portable terminal to do this. Wireless merchants process all their payments on site and in real time and usually at places where their customers are.
Keyed or no card present merchant account holders collect their customers card information indirectly. They can then process the information they get in different ways. The sub-categories of keyed merchant account holders are:
- M.O.T.O (Mail Order/Telephone Order) merchant account holders
The above merchant account holders do not meet face to face with their customers. They instead, collect all their orders and card information from their customers via the phone, fax, internet, or mail. After this, they enter all the transactions manually either through a point of sale, terminal, or through a payment gateway system. Only after confirming that the payment is okay can the product be shipped for delivery.
- Ecommerce merchant account
Also known as internet merchant account, the merchants conduct their various businesses through their websites. Every merchant account processing of the card information is in real time and takes gets instant online approval. They have gateways built into their websites shopping cart that helps then to carry out these transactions online. After the sale goes through successfully and after charging the card, the product is then shipped for delivery.
3. Other types of high-risk merchant accounts
There are other types of accounts mostly seen as high-risk merchant accounts. Though all businesses are risky, some businesses are riskier than others are. Some of the factors that determine how risky a business are the high chargeback merchant accounts to the bad credits of these businesses. Below are some of the high-risk merchant accounts:
Travel merchant accounts
Travel is high risk and many travel agents do not accept credit cards from many processors. However, many of the travel agents work directly with acquiring banks to process merchant cards. Travel business is very dynamic and if the merchants are not careful, they end up paying high chargebacks. – Dating merchant accounts Online dating is another very high-risk merchant account. It takes some time for online dating merchants to earn approval to make transactions through merchant accounts. However, if you get a provider willing to open a risk merchant account for your online dating services, then you are good to go.
Offshore merchant accounts
Offshore merchant account is another high-risk merchant account. An offshore merchant account is a kind of bank for e-merchants in non-resident countries. Many local banks are very hesitant to open merchant accounts for merchants outside their countries areas of operation. To agree to open merchant account, they ask for different kinds of documents and a foolproof report of successful credit histories.
International merchant accounts
International merchant accounts are solutions that allow ecommerce businesses to accept payments via credit cards from customers all over the world. It is not a very easy thing to do because finding international merchants is not a very popular thing. This prevents many ecommerce businesses from expanding abroad.
Wrapping it up
You can grow your business today both online and offline by setting up a merchant card account. With a merchant account, you can use the services of Visa Merchant account and MasterCard merchant accounts to make larger transactions, to garner more speed and efficiency in your business transactions, to reach out to more customers and improve your customer experience. With the advance of technology and crypto currency you also enjoy a multicurrency merchant account for more exposure. Merchant account is the solution for more flexible payments.