How to Get a Merchant Account

Once you are ready to take your store online, if you want to accept credit cards for your products, you will need to set up a merchant account. A merchant account is a third party that will process your customer’s cards, take a small percentage of the total for the merchandise, and then deposit the rest into your bank account.

There are thousands of companies that offer merchant accounts and it can be confusion to know which one you should pick. Your local bank may even offer a merchant account, so if you feel more comfortable having your bank handle the transactions, you may want to set up an account with them.

Many companies are now offering a free set-up with a merchant account, which is usually a savings of as much as $300. As we mentioned above, these merchant account providers will take a small percentage out of every sale. This can be anywhere from 2 to 10% depending on the company and the type of card that is being processed. You may also be charged a transaction fee, which is normally around .35 for each transaction. In addition to these fees, there is normally a monthly service charge, and a gateway fee for processing transactions on the Internet.

When you sign up for a merchant account, you will need to purchase the software that is used to run the transactions. This is in addition to your shopping cart, and may be somewhat expensive. However, most companies allow you to pay a monthly fee for this software, making it more reasonable for smaller companies.

Since having a merchant account can be very expensive, it is important to figure in these fees when you are setting your prices for your products. They can quickly eat away at your profits if you aren’t careful.

You will also need to decide what kinds of cards you want to accept. Visa and Mastercard feature the lowest transaction fees, with Discover coming in very close. American Express charges the highest fees and is the hardest card to be approved to accept. The transaction fees will be determined by the card issuing company and may be charged in addition to your regular transaction fees.

Once you have set up your account, you can begin processing customer card information. You will need to make sure that this transaction is secure to protect your customer’s transaction. After they have entered their information into your cart, they will either be transmitted through your payment gateway if you have a real-time processing mechanism in place, or the data will be stored for you to process manually later on.

After the card has been processed, there is usually a 2 to 5 day waiting period before this money is deposited into your bank account. You may need to allow extra time if your bank is slower processing electronic funds transfers.

While it may seem very expensive to have a merchant account, being able to process credit cards can actually raise your sales by as much as 52%. As with any business, you may have to sacrifice a little in one area to reap the rewards in another.

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The Benefits of Using Verisign

Posted on 12/14/05 9:59 PM

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