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The Facts About Internet Merchant Accounts
By: Mark Woodcock, Sat May 27th, 2006
If you own and operate an online business, then you realize that
without giving your customers the ability to pay for your
merchandise with their credit cards you are not likely to make
much money. Online shopping practically depends on credit card
transactions. Online shopping has never been more prevalent than
it is right now, and the vast majority of online customers
prefer to pay for their goods with their credit cards. That is
why you need to consider opening an Internet merchant account.
By doing so, you will be able to provide a quick and convenient
payment method for your customers, as well as provide your
business the opportunity to expand tremendously.
An Internet merchant account is set up an online merchant
account provider for an online business in order to accept
credit cards as payment from customers. The account provider
works to authorize credit card purchases and makes sure that the
funds are deposited into your business bank account.
Traditionally, merchant accounts were not offered by banks to
online business owners. But, with the increase in online
shopping in recent years, there are a number of Internet
merchant account providers turning up that offer services
specifically to those business owners that market their products
online. Banks still typically do not offer online merchant
accounts, out of fear of credit card fraud. When you decide to
search for an Internet merchant account, since there are so many
providers out there, it is important that you research all of
the factors involved with Internet merchant accounts,
particularly the fees and services, so that your profits stay
with you and your business continues to grow.
There are many potential costs associated with opening and
keeping a merchant account. Not all Internet merchant account
providers will charge these fees. These fees include the
application fee, which is incurred by the provider to cover
application processing costs, no matter if you open a merchant
account or not. Some Internet merchant account providers will
waive the fee if you do open an account with them. And some
merchant account providers don't even charge this fee. Often, an
annual fee is charged on an Internet merchant account as well.
Providers charge this fee for no other reason than for having an
open account with them. There is the statement fee, a monthly
charge that can be as much as $25 per month, which is imposed to
cover the account provider's own costs. Another type of fee, the
discount rate, is deducted from each and every one of your
sales, usually between 2 and 4 percent. The fixed transaction
fee, like the discount fee, is based on each sale, but is a
static amount regardless of the cost of the merchandise bought,
usually .20-.30. There are also various miscellaneous fees that
are levied on your account, including a termination fee, which
is charged if you cancel your account before the contract is up.
Further, there are even charges that are withdrawn if a customer
requests a refund, with the purchase amount credited back to
their credit card.
Obviously, there are many potential hefty costs associated with
an Internet merchant account, and it can take your profits away
from you. It is important that you assess different the Internet
merchant account providers and the fees that they will charge so
that you don't lose money unnecessarily. One way to do this is
by using your current sales data to estimate the costs of your
Internet merchant account.
With an Internet merchant account, payment processing usually
comes in the form of real-time processing. Real-time processing
is ideal for online merchants because the credit card is
directly processed at the time an order is placed. The customer
quickly receives an email notification that the order is
accepted and the fund transfer is approved, once verification
and approval of the credit card is received. There is usually a
slight delay of a few days before the funds will be deposited
into your bank account.
Ideally, you will want to have a sustaining business
relationship with your Internet merchant account provider. There
should be no doubt in the trust or confidence you have in your
provider. In addition to speedy processing of your credit card
sales, your Internet merchant account provider should offer
other services that will allow all of your business transactions
to run smoothly. They should accommodate several brands of
credit cards (Visa, Mastercard, Discover, American Express,
etc.), as well as providing additional payment alternatives,
like PayPal. They should have a clean record of good service and
consistency. And they should be superlative in providing you
customer service. All issues or problems should be handled
tactfully and quickly. Because of the apparent necessity of
having an Internet merchant account, the provider you choose can
make or break your business with fees and service. It is
critical to know the facts about Internet merchant accounts and
their providers so that your business continues to thrive.
About the author:
Learn the essential information for picking the right merchant
account services. Internet Merchant Accounts
