Bringing Your Store to the Web: Finding a Merchant Account

A few months ago we shared the 4 steps necessary for Bringing Your Store to the WWW. This article will go more in depth on Step 4: Find a Merchant Account. Accepting credit cards for your online products or services is important, but there are several things you need to consider when choosing an online credit card processor:

Type
Most credit card processors fall into two categories: third-party and online merchant account. Third-party processors, such as PayPal and Google Checkout act, as intermediaries between store owners and their own merchant accounts. Customers typically are redirected to the third-party’s web site to pay for goods or services. On the other hand, companies that offer online merchant account services like North American Bancard and the like are directly tied to a bank. In this case, the customer remains on the store owner’s site for the full transaction.

Fees
Before signing up, make sure you fully understand the fees necessary to take credit cards online. These fees could include:

• Set-up: Some credit card processors charge this one-time fee to set-up your account or process your application.

• Per Transaction: A flat fee that is charged each time a customer pays by credit card at your online store

• Discount rate: This is also charged for each online transaction but as a percentage

• Monthly maintenance: Some companies charge fees for monthly statements, account maintenance or support

• Minimum Sales Threshold: Some companies require you to accept a minimum amount of sales per month via credit card. Be realistic about whether you can meet this threshold because if you don’t, you will likely have to pay the difference.

When checking potential fees, also consider your anticipated sales volume. In some cases, the more credit card sales you bring in, the smaller your discount rate.

How You Get Paid
Once a customer purchases your product or service online, find out where the money goes. In some cases, like with a third-party processor, the money will sit in a separate account until you request a transfer to your bank. With an online merchant account, money is typically deposited directly into your business account for you.

How Disputes are Resolved
Make sure you understand how your credit card processor will handle disputes, such as customer refunds, fraudulent cards being used to purchase on your site, etc. In some cases, your account may be frozen until the dispute is resolved. While this is done “in your best interest,” it can cripple a healthy online store.

Customer Service
Lastly, thoroughly examine the support policies of your chosen credit card processor. You do not want to find out in an emergency that your processor only does e-mail support between 12 pm and 2pm every other Monday. Make sure the level of support will meet your needs whether it is by frequent email, live chat or phone support.