E-commerce websites are hardly new to the market, yet it is quite common to see owners experiencing challenges in getting approved for merchant accounts from banks and financial institutions because of the danger of credit card fraud. Luckily, there are many internet merchant services that are more than willing to service e-commerce businesses. These specialized service vendors have an in depth knowledge of the difficulties involved in managing e-commerce businesses irrespective of their being low or high risk, small-scale or large businesses.
What to look for in a merchant account provider and credit card processors?
There are numerous merchant account providers out there that offer a variety of services to a broad selection of business types. Before applying for a merchant account, scrutinize your credit report. If there is a possibility of making it look better, do so. A good credit report will get you better rates. Merchant account providers 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 going, an e-commerce business requires a merchant account to process credit cards. You can get it in two ways :
* True merchant account: This is an account a business has with a bank or other financial organization; this option is generally favored by large, 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 kind of business - (low or high risk) that will be conducted on the website; the bank approves or rejects the request on that basis. The e-commerce business must conform to the rules stipulated by the bank.
* Third party processor account: Such an account is well suited to smaller businesses or startups, and high risk businesses that have a hard time getting accepted for merchant accounts otherwise. In this case, the online business submits a request to a third party service that processes all the credit card transactions in the account owned by it. The business is not subject to stringent level of verifications and need only comply with the policies of 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 select a suitable shopping cart. You need to look for a shopping cart application that would work seamlessly with your merchant account and payment gateway.
Lastly, compare credit card processing service rates: Request quotations from about three credit card payment processors and compare their charges and services. The fees can range widely based on the average sale per credit card transaction, (average ticket size) and the average number of credit card sales seen per month. All the applicable costs must be explained clearly and specified in the agreement. Fees of most providers include:
* setup fee
* discount rate (percentage of each transaction)
* transaction fee
* monthly minimum fee
* cancellation fee
* gateway fee (if not included in the package)
* application fee (optional)
* miscellaneous charges
Don't make any hasty decisions. Run a a comprehensive comparison of vendors before making a decision. Closely scrutinize the services provided, rates, quality of customer service, etc. Get references and ask them questions to make sure the provider has delivered in the past. Changing credit card processing services could be a tedious job. Do your homework to make the right choice the first time around.
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Daljeet Sidhu. Best credit card processing advice. Credit card processing fees blog.