Accept Credit Cards With An Online Merchant Account - 3 Things You Should Know

Accept Credit Cards With An Online Merchant Account - 3 Things You Should Know

Are you the owner of a small business who is considering accepting credit cards? If you choose to begin accepting credit cards, you are potentially allowing your sales revenues to skyrocket as you give people more options for how to pay you.

You may already be aware that, in order to begin accepting cards as a valid method of payment, you will need to set up a merchant account. One of the most convenient ways to do this so by setting up your merchant account so that you can process transactions online.

A merchant account is essentially a type of bank account that gives businesses the ability to accept payments via debit or credit cards. By setting up the account, three different parties essentially are entering into a mutual agreement. Those parties are the retailer, the merchant bank and the payment processor. The payment processor is the entity that settles credit or debit card transactions.

Setting up an online credit card processing merchant account allows you to process payments without relying on a physical credit card processing machine, or terminal.

If you would like to accept credit cards with an online merchant account, here are 3 things you should know:

1. You will need to select an online payment gateway:

As mentioned above, the payment gateway is the payment processor responsible for settling your transactions. A gateway is essentially an e-commerce service that authorizes payments for online transactions namely, e-commerce transactions. It is analogous to the point of sales (POS) system or credit card machine found in brick-and-mortar merchants.

In most cases, the payment gateway is independent from the merchant account provider (e.g., the bank). The gateway usually consists of a secure virtual terminal and an interface between the website's e-commerce system and the gateway's own servers.

2. The discount rate is the amount the merchant charges and varies depending upon the transaction amount:

The discount rate is a special type of fee that you will have to pay each time you process one of your customers' credit cards. The discount rate is essentially the combination of a number of dues, fees and other charges that you are required to pay. The largest of these fees is something called the Interchange fee. While your merchant account provider incurs many of these fees directly (which they pass along to you), they are also adding a margin to those fees for the sake of their own profit.

The discount rate is calculated as a percentage of the transaction amount. It usually ranges from 2% to 3.5% of the total transaction amount.

3. There are other fees involved in the process, as well:

Other fees that you must pay include the authorization fee, statement fee, monthly minimum fee, batch fee (which can be charged to a merchant whenever the merchant "settles" their terminal), the customer service fee, an annual fee, early termination fee, and chargeback fee. While these may sound a bit overwhelming, the ability to accept credit cards still gives you more opportunities to make money than if you limited yourself to cash and checks.

Consider these 3 things you should know as you learn how to accept credit cards online with a merchant account.

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