All About Ecommerce Merchant Accounts
While a new concept to some, an ecommerce merchant account isn’t too difficult to understand, although there are many processes that are required to facilitate such payment processing online. Without an ecommerce merchant account, an online business owner would be unable to accept card payments from patrons. Let’s explore why ecommerce merchant accounts are important, and whether they fit you.
When you apply for an ecommerce merchant account, you’ll be asked to provide your average order amount, and your typical monthly amount expected to be processed. Additionally, you could be required to reserve a certain percentage, as insurance against fraud. Inform your ecommerce merchant account provider of changes.
As well as obtaining an ecommerce merchant account for processing online transactions, merchants also must have order forms on their sites, built by any competent web design firm. Further, you need processing software for managing exchanges between you and your ecommerce merchant account provider.
After you’ve established an ecommerce merchant account with a reputable provider, daily card sales are deposited into the account, minus service fees. Some organizations even perform merchant services, from customer support, billing, and authorization, to reporting and settlement.
There are fundamentally two kinds of card authorization, batching and real time. Batching, typically for merchants with less sales volume, is performed offline, manually. When consumers order via online forms, the forms are processed manually. Because fraud is more of an issue online, and because the little guys are less able to suffer fraud, they should consider batching payments before selecting real-time processing.
- Online retailers must additionally consider fees involved with ecommerce merchant accounts, and decide which will work with them, and which will damage their business. Merchants should carefully assess whether such fees will nullify the profits they’ll gain. Some common fees involving ecommerce merchant accounts include:
- Installation: These costs include equipment, software, start-up, and programming.
- Discount Rate: The percentage of card sales that your provider charges for transaction settlements, determined by average order size. A larger order mandates a smaller discount rate, up to 3%.
- Chargebacks: These are charged when disputes are settled favoring the cardholder. As well as losing the sale, you can lose up to $50.
- Per-Transaction: The amount that your financial institution pays consumers’ financial intuitions for each settled transaction. So, if you’re selling many low-cost goods, it’s wisest to choose those ecommerce merchant account providers with the lowest rates.
- Monthly Fees: These include minimum fees, statements, and excessive use.
While the service and fees of ecommerce merchant account providers vary, use caution when you apply, and consider the above issues during the entire process. With a little luck, you’ll be operating with an ecommerce merchant account in no time… and successfully, too!