DOES YOUR E-COMMERCE REQUIRE A MERCHANT ACCOUNT

An increasing number of merchants want very much to capitalize on the online buying and selling that has seen an unprecedented growth in the recent years. If you are one of them, you need to sign up for a merchant account before you can start accepting payments on your e-commerce website.

Definition Of Merchant Account

Merchant account is similar to a bank account. It is where funds from credit card payments are deposited into and eventually transferred out.
A merchant account is usually opened with a credit card processor, which is a financial institution that manages credit card transactions. When credit card transactions are processed and approved, the funds are deposited into the merchant account. As the merchant account does not hold on to the funds for an extended period of time as a regular bank account, these funds are transferred out into your preferred regular bank account, usually on a daily basis.

Why Must You Have A Merchant Account Before You Can Accept Credit Card Payments On Your E-commerce Website?

As credit card processors do not directly transfer funds from credit card issuers to your regular bank account, you need to set up a merchant account with them that functions as an intermediating account.

Furthermore, your merchant account will allow you to process the credit card transaction in real time using real time internet payment gateway. This increases the surety of the sale and funds to be transferred to you sooner.

Lastly, having a merchant account on your e-commerce website increases the credibility of your business and therefore, reduces the rate of shopping cart abandonment.  

If You Own A Small-Sized Business, Should You Choose A Merchant Account?

Setting up a merchant account can be costly. There are both fixed and monthly fees to consider when deciding on a merchant account. If you own a small business or has just started one, these costs may not only be too much for you but also they may also not exactly be profitable.

Some merchants use PayPal as a secondary alternative in order to accept and process credit cards. However, payment via PayPal often requires customers to register with PayPal. Not everyone will be willing to do this and you may lose customers. By using PayPal you are also not able to provide your clientele with much flexible payment options. PayPal may also set limits on your transactions or worse freeze your account. Lastly, your customers may not perceive your e-commerce to be as credible as one with a merchant account.

However there is the option of setting up a third-party merchant account if you feel daunted by the costs of setting up your own merchant account. The security that customers expect, management of chargebacks and administration of other details are dealt with by the third-party merchant account providers. As you may expect, the monthly fees are higher but you save on set up fees, gateway fees and SSL fees.

Please refer to http://website101.com/shopping_ecommerce/payment_processor_merchant.html for a more detailed look at how third-party merchant accounts work.

How Do You Choose Your Merchant Account?

• Regardless of the size of your business, it is unique and you should first study your specific business type and needs.
• Do an extensive research on the merchant accounts available. Focus on their rates and costs.
• Look out for those that offer discounts, savings and additional features that specifically will benefit your business. However, those that offer too-good-to-be-true rates, they probably come with hidden or arbitrarily added on charges.
• Do your math constantly and ensure that the increase in sales brought about by your selected merchant account and the credit card processing solution is greater than the costs incurred in investing in them.
• Check that your merchant account is compatible with your selected payment gateway. 
• Read up on reviews and referrals of the merchant account provider by current or previous users.
• Read the terms and conditions carefully.

For a more informative read on selecting a merchant account, please take a look at http://www.merchantexpress.com/choosing_merchant_account_provider.htm.

Is It Difficult To Manage A Merchant Account?

The good news is that it is very easy to manage a merchant account. You will be provided with a userID and a password to access your account and monitor the transactions whenever you want to. Please take a look at this query and answer for an example http://www.wallacesolutions.com/qb/showDocument.cfm?id=1085.
Having a merchant account also makes bookkeeping a breeze as you can double check and keep track of every transaction using the monthly statements that will be sent to you. Having your merchant account on your e-commerce website benefits you in ways more than one. It builds consumers’ confidence in your e-commerce and can increase your sales. Although the process to get one may seem daunting due to the research involved, it is worth all your effort.