Internet Merchant Accounts: The Secret to a Fruitful Business

For online businesses, learning to compete in a global marketplace presents certain specific challenges all its own. Learning to identify strategies that can keep your business competitive is the key toward ensuring your company has a productive and fruitful future. For any business, beginning to accept credit cards as a means of payment can yield substantial increases in both the company’s customer base and its profits. But for online businesses, the need to accept credit cards is a critical component of any business that hopes to thrive – or even continue to operate – on the worldwide web. Studies show more than 90 percent of customers who shop online use credit cards as the method to pay for their purchases. More than 90 percent. If you aren’t accepting credit cards at your online business, that’s a huge potential loss of customers – and profits. Opening a merchant account – the vehicle that will allow you to accept credit cards for purchases of your business’ goods and services – is a simple process. And the fees associated with maintaining your merchant account are lower than ever before. When you decide the time is right to venture out and consider which merchant account services and options are right for your own online business, consider the following tips to help ensure you get the best account for your business’ needs: Just what is an Internet merchant account? An Internet merchant is designed to specifically meet the credit card processing needs of a business that is operating on the worldwide web. Using special, proprietary software, an Internet merchant account helps process credit card transactions, from the moment the information is entered into your online shopping cart system, to the moment the transaction proceeds are transferred and deposited into your business bank account. Internet merchant accounts can be either real-time or delayed processing. Which one is best for your company depends on the amount of daily sales you expect, as well as how much involvement you want to have with your credit card transactions, and your overall budget. The advantages and disadvantages of each type of account are described below. What steps are involved in processing credit card transactions? In a real-time system, credit card transactions are processed automatically with no need for intervention by the business owner or sales staff. Credit card information is collected by the online shopping cart and then sent by an encrypted and secure connection to the card issuer. Most Internet merchant accounts use a special type of program, called a gateway provider, to aid in this process. The gateway provider can also serve as an added level of protection against fraud. During the processing, your merchant account may also use as address verification system, or AVS, as an added level of security. Once the information is transmitted to the card issuer, the card information is compared to the information on file, and the card issuer determines if the account is active, if it has been reported lost or stolen, and if there are enough funds in the account balance to cover the costs of the transaction. If there are no red flags, the card issuer assigns a unique transaction ID number and the funds are set aside for transfer to the business bank account. At the customer’s end, a virtual receipt is issued and the sale is complete. Later in the day, the merchant account tallies up the day’s receipts, deducts applicable daily and transaction-based fees, and then deposits the remainder into the business bank account. In a delayed processing system, the customer enters the credit card information in the same way as before, but instead of having it automatically processed, it is stored by the merchant account system. Later in the day, the business owner or sales staff retrieves that information and then must enter it manually for processing. Only at that time is a receipt issued. Delayed processing systems are less expensive than real-time processing systems, but they are limited to the number of transactions that can be entered manually each day; therefore, they are not a good choice for businesses expecting large daily sales volumes, or for those who do not wish to be involved in processing their online transactions. What equipment is needed for an Internet merchant account? As noted, you’ll need an online shopping cart system, as well as a gateway service for real-time systems. Some merchant account providers use their own gateway providers, while others will require you to find one on your own. Be sure the software used by the gateway system you choose will work with the software used by your merchant account provider in order to allow for smooth, error-free transactions. Opening a merchant account is the first step in accepting credit cards for your online business. Using these tips, you can choose an account provider that will help ensure your online venture is successful – and fruitful.