The basics of accepting credit cards online using merchant accounts

For every online business accepting credit cards online is a must in the present day scenario. Not being able to accept credit cards online could make you loose out on a major chunk of your potential buyers. Orders with online payments are the major source of business for any online business. And with the facilities available, setting up a merchant account and facilitating credit card payments on your website is no more a tedious process. The three basic things that one would need to accept credit cards online are a merchant account, software and an internet service provider. Here are details about each of these three things.

A merchant account:

It is a specially designed account that the merchant is required to have in order to accept online payments. Your account used to collect offline credit card payments may not come handy. There is some amount of risk associated with these online merchant accounts and so the account issuing authority, that is the bank, may be somewhat careful about setting up such accounts. If account that you use currently fro your business does not have a provision for online transactions, you could also get this very account modified to use it as a merchant account. When you wish to open a new merchant account you can make use of the services of a broker. Though this can get a major burden off your head, still you need to be cautious as there is a vast difference in the rates being charged by the brokers and there are some of them out there who would try to sell you unnecessary equipment and software. You do not need any software or gadgets as such to open a merchant account. Restrict the charges you have to pay to the broker to no mare than a few hundred dollars. And have a detailed list of what all facilities he will provide you with.

The fees linked with this account are more for maintaining it not really for setting up the merchant account. You will be paying a discount fee for all sales and this is calculated as a percentage of the total amount of each transaction. The rate varies from 1.5 to 5 percent. The second type of fee is the transaction fee which is a fixed amount per transaction and in case the transaction is below the defined minimum transaction amount this fee will be a higher percentage than the normal rate. There is also a fee called address verification fee which is as low as 0.05 dollar per transaction and this fee goes a long way to protect the merchant from fraud. The bank may also ask for statement fee for the statements it sends you on a monthly basis, the charges are something like 10 to 20 dollars per statement.

To maintain your merchant account, you must pay the following monthly fees:

• Discount fee - For Internet sales, this fee should be between 2.5% and 2.9%. You should be suspicious of any discount rate that is less than that.

• Transaction fee - This fee should be between $0.20 and $0.30 per transaction.

• Address Verification Fee (AVS) - This fee should be $0.05 per transaction. Some (very rare) financial institutions may not require this service, but it is a must for you because it helps to prevent fraud.

• Statement fee - This fee is usually between $10 and $15 per month.

Dont let the volume of your business bother you, a merchant account is god even for small businesses with low monthly turnovers of around a few hundred dollars.

The software requirement:

When opening an account through a broker the software required to accept credit card payments may come tagged along in the offer. But when applying directly with a bank, you may have to buy a software solution from outside. The software solution will enable your website to validate credit cards and authorize and accept payments online within no real time. The costs of these solutions vary drastically with service providers but dont settle for any thing priced above 500 dollars. And never ever go on to take a software on lease basis asking you fro monthly payments as they will turn out to be all too costly over a period of time. The software must be well backed up with enough technical support. And the best thing is that you may not need to buy any software at all if your internet service provider has already installed processing software on his server. But this type of ISPs are normally high priced. Evaluate the benefits and equate them with the costs before jumping to any decision.

Internet service provider:

This is the toughest choice to make, as the services and charges may vary greatly. There are some ISPs who provide complete solutions and software to enable websites to process credit card payments. The price tags could be from 10 dollars to 200 dollars a month. The basic features that you must look for in an ISP are:

• The server should be secure or else the buyers will never place their orders on your site. Secure servers are not too expensive and on most occasions they are provided for free. To be able to use ones own domain name as the secure server would require the purchase of a certificate costing a few hundred dollars an year.

• You may need order processing and store display software. The price for these could vary from 20 dollars to a few thousand dollars. However, some ISPs provide order processing software within the hosting package, the cost for such would be slightly higher.

• Its better to opt for ISPs with secure server and processing services. Or buying things separately would only stretch your budget.

So that is just about all that you need to know about credit card processing on your website using merchant accounts.