Merchant Account Basics

An internet merchant account is the only way that online merchants can accept credit card payments for goods purchased through their websites. The internet merchant account will allow internet businesses to also accept debit card payments. These payments are processed in real time and can be available to the merchant within a week, unlike the turnaround rate a traditional credit card machine can offer.

When shopping for the right internet merchant account, the merchant must look for an account provider that will take most major credit cards including Visa, MasterCard, Discover, and American Express. Merchants can also choose accounts that also accept international currencies and electronic checks. Once you find the right merchant account, an application is filled out and confirmation of approval is sent.

The merchant account will have many options for providing payment processing. The most common is the online shopping cart. Once this shopping cart is placed on the merchant’s website, the merchant can start accepting credit and debit card payments.

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Once the first order is placed, the payment information is then sent to your shopping cart’s gateway. Here the information will be verified and checked to see if the credit card is valid. The gateway provides a secure connection between the credit card company, merchant account, and the bank. This gateway check also ensures that there is enough money available to pay for the purchase. After the payment is verified, the information is sent to your account and the purchase is approved.

Approved payments are sent to your merchant account and have anywhere from a day to a week. This hold prevents merchants from having to pay money for chargebacks or disputed charges on the consumer’s end. Before the money can be accessed by the merchant, the credit card transaction fee must also be taken out of the final purchase price.

The payment transaction fee will vary depending on what merchant account service you choose. Most competitive rates fall between one and three percent. Merchants that choose a higher volume account can benefit from lower rates. A high volume account will typically handle $50,000 or more of transactions per month. You can also save money on the initial investment into a merchant account by finding a company that offers no application fees and low cost or free software to process your payments.