Whether you need to accept credit card payments in brick and mortar store or you want to accept credit card payment online, merchant account is very important.
Merchant account is basically a financial arrangement with the card processor. It allows merchants to accept payments from debit or credit cards. In case of e-commerce websites, an internet merchant account enables merchants to run web-initiated transactions online. There are basically two types of merchant accounts- one used for transactions in brick and mortar stores in which credit card and cardholder are present physically and second in which neither card nor cardholder is present, typical in e-commerce. When you use a card for shopping, funds debited from your card go into the merchant account. From this account, the funds are transferred to the merchant’s normal business account on a daily or weekly basis. If you have been planning to start a business, you will need a merchant account in order to accept credit card payments online. For this, you will have to find a reputed merchant account provider or use the services of an aggregator such as PayPal to get transactions processed on behalf of your company through their merchant account. Whether you get into a merchant agreement directly with the acquiring bank or through an aggregator, you will be bound to obey operating regulations that have been established by the card associations. You will have to get into a legal agreement in order to get this account. There are terms and conditions involved and a contract needs to be signed. Make sure you read the merchant account agreement carefully before signing. Ask as many questions as you can because your choice of merchant account can impact your business to a great extent. When it comes to e-commerce, merchants need payment gateway in order to accept credit card payment. Gateway is mainly an e-commerce services through which payments are authorized for online retailers and e-businesses. It is like a POS (point-of-sale) terminal that is used for accepting card payments in brick and mortar stores. Some providers of merchant account have their own payment gateway; however, majority use a third party gateway. Payment gateways have two components- a virtual terminal that allows merchants to log in and key in credit card numbers and the e-commerce site’s shopping cart that is connected to the gateway. If you wish to accept credit card payment online, you need to have an online merchant account. Once customers make a payment from their credit card to buy something from your website, the payment will go straight in your merchant account. Since you will be getting a merchant ID and password for your account, you can be assured of secure access.
Fees and rates for getting a merchant account There is a variety of fees charged by merchant accounts. Some fees are set by merchant account providers; however, majority of percentage fees and per-item fees is passed to the credit card issuing bank from the merchant account provider. You can get merchant accounts from processors or resellers. Resellers are mainly ISOs (independent sales organizations) such as banks or MSPs (merchant service providers).