E-commerce websites have been around for a number of years, yet it isn’t uncommon to see owners facing challenges in getting approved for merchant accounts from banks and financial institutions because of the danger of credit card fraud. Thankfully, there are other internet merchant services that are enthusiastic to service e-commerce ventures. These specialized service vendors have a good understanding of the difficulties involved in managing online businesses be they low or high risk, small-scale or large undertakings.
What should you look for in providers of merchant account and online credit card processing for small business?
There is no dearth of merchant account providers out there that cater to an extensive selection of business types. Before requesting a merchant account, scrutinize your credit history. If there is any opportunity of improving it, do so. A good credit report will get you more economical rates. Merchant account services also look for the following information on your website:
- an unambiguous policy on returns and refunds
- terms of use statement
- a privacy policy
- a shipping policy with details of included costs
First get a merchant account: To get started, an online business needs to have a merchant account to process credit cards. There are two ways to get it:
- True merchant account: This account is one that a business holds at a bank or other financial organization; this option is generally preferred by big, established businesses. The business submits an application for a merchant account; the bank checks the credit report of the business or the proprietor, and the type of commerce – (low or high risk) that will be carried out through the website; the bank approves or rejects the application on that basis. The e-commerce business must conform to the rules defined by the bank.
- Third party processor account: Such an account is ideal for smaller businesses or startups, and high risk businesses that have a hard time getting approved for merchant accounts on their own merit. In this case, the e-commerce business submits an application to a third party processor that processes all the credit card transactions in its own account. The business is not subject to stringent level of verifications and must only conform to the policies laid down by the processor. A good example of a trusted third party processor is PayPal.
Select a suitable shopping cart application: Next step to start accepting online payments is to find a suitable shopping cart. You want a shopping cart application that would work seamlessly with your merchant account and payment gateway.
Lastly, compare credit card processing service rates: Invite quotations from about three providers and compare their credit card processing fees and features. The rates can vary based on the average sale per transaction, (average ticket size) and the average number of credit card sales seen every month. All the applicable costs should be clearly mentioned in the agreement. Fees charged by most providers include:
- setup fee
- discount fee (percentage of each transaction)
- transaction fee
- monthly minimum fee
- termination fee
- gateway charge (if not included in the package)
- application fee (optional)
- miscellaneous charges
You should take the time to do a comprehensive comparative study of vendors before making a decision. Compare services offered, rates, quality of customer service, etc. Get references and get as much information as you can to make sure the vendor has delivered in the past. Changing credit card processors could be a cumbersome task. Get it right the first time around.
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