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How to Set Up An Internet Merchant Account to Boost Online Sales

March 07, 2013, 02:29 PM

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Internet merchant accounts are vital to any business that requires people to pay online for goods and services. Just as you need to set up a traditional merchant account before you can accept credit cards in a physical store, you must set up an Internet merchant account before you can accept credit cards online. You generally have to have good credit and a strong business plan to obtain an Internet merchant account.

Find the Right Provider For Your Business

If you want to set up online merchant services, the first thing you need to do is determine which provider you want to work with. Internet merchant accounts work like traditional credit card processing accounts. Your provider charges you a fee for each transaction and then processes the transaction. You'll then see the money in your account within two to three business days of the transaction.

Use a merchant account provider that is affiliated with Visa, Mastercard and/or American Express. This allows you to process credit card and debit card transactions on these three networks. In addition, Visa and Mastercard have fraud protection policies in place. These networks verify transactions before they go through, which helps protect you against fraudulent transactions. If you accept a transaction through your merchant account and the cardholder reports the transaction as fraudulent, you will lose the money you earned through the transaction. This is known as a chargeback, and too many chargebacks negatively affect your credit and put you at risk of losing your Internet merchant account.

Online merchant services differ somewhat as to how much they charge you per transaction and what you have to provide before you can set up your account. Some traditional banks offer online merchant services as well, but you might want to work with a provider that specifically focuses on Internet merchant accounts so that you can get the best service for your business. Provide your business plan and website address when you apply for a merchant account. You have to prove that your business makes enough money to be a good credit risk and you may also have to have a personal credit score of 650 or higher to qualify for service.

Understanding the Costs 

Once you apply for merchant services, your provider usually charges you a setup fee. The initial fee varies based on your personal and business credit score; it can be as much as $400. You must pay this fee to set up your account. You'll also have to sign a contract agreeing to per-transaction fees. Some providers require you to pay a flat fee for each transaction you process through your online merchant account. Other providers charge you a percentage of each transaction. Either way, make sure that you are charging enough for your goods or services to make a decent amount after you subtract the fees.

Once you've finished setting up your account, the only thing you have left to do is integrate it with your website. You'll need to set up a shopping cart and a secure checkout page. Your Internet merchant services provider can help you do this. Once you've added the ability to pay via credit card to your website, your customers can click through to order goods or services and you'll get the money in your bank account three to five business days after the purchase.

If your credit isn't good enough for a traditional online merchant account, you may be able to set yourself up with a payment processing service. Payment processors are third parties that process all payments for you. The biggest difference between payment processing services and merchant account services is that you usually can't integrate payment processing services directly into your website. When your customers click through to check out, they'll have to go to the payment processor's website to complete the transaction and then return to your webpage. However, payment processing services often charge lower set-up fees and lower per-transaction fees than traditional merchant account services, so they are more affordable for your business. Paypal is an example of a non-traditional online merchant account service. This service is slightly different than many other payment processing services because customers can usually pay directly from your page as long as they are signed into their Paypal accounts. Paypal also gives you instant access to payments once they've been made, while many processing services hold payments for 30 to 60 days. Check with your payment processing service to determine how quickly you can expect transactions to appear in your bank account and what fees you have to pay.

Michelle Latham
Vice President
Switch Commerce
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