Merchant Account Internet
Merchant account and the Internet: how it works.
Merchant Accounts and the Internet
You must have a merchant account to process credit cards, and
these may be either a retail merchant account or an ecommerce
merchant account.
As far as the retail version is concerned, bricks-and-mortar
shopkeepers will be familiar with the authorization process —
swiping the card or phoning to authenticate — and this may
be all your online business requires.
If you operate on low volumes (e.g. letting a farmhouse for the
summer), or face little competition (subscription to a specialist
ezine), you can simply take the customer's credit card details
with encrypted email, authenticate as convenient, and then email
acceptance.
Merchant Account Internet: Realtime Merchant Accounts
Very different is the ecommerce
internet merchant account serving the needs of the high volume
e-merchants who process credit cards online in real-time. Website
customers expect sale acceptance within a minute, and to be furnished
with tax and shipment details. More sophisticated software is
needed to handle the transactions, and the perceived risks are
greater — which means higher charges all round.
Nonetheless, taking credit cards online is essential for many
e-businesses, and the greater costs are more than outweighed by
the advantages. Indeed, studies suggest you'll lose 60-80% of
sales if you can't credit cards online.
How Merchant Accounts and Payment Gateways Work
The Internet merchant account acts as an intermediary or clearing
house between your bank and your customer's credit card account.
The transaction operates through software called a gateway payment
system.
Procedures differ somewhat depending on the providers and countries
concerned, and third-parties may intervene with fraud detection
systems, but the essential steps are given in our e-book.
MAPs and Credit Card Processors
Internet merchant accounts are provided by Merchant
Account Providers (Maps). These may be acquiring banks, Independent
Sales Organizations, or the ISP company hosting your website.
To add to the confusion, Credit Card Processors may also be called
Maps, though their role is actually limited to processing the
credit cards associated with merchant accounts. Like ISOs, CCPs
supply software (payment gateways) and sometimes the hardware
to physically process the cards.
An ISO account will normally come with its own Credit Card Processor,
but you may have some choice if your business bank provides the
merchant account. Consult our resources
page for an extensive list, and evaluate carefully.
Doing Without a Merchant Account
Quite apart from the difficulty of obtaining one, particularly
if the business is located outside the USA, Internet merchant
accounts are expensive for the small or fledgling business. Many
such companies do take credit cards online and in real-time, however,
but use alternative payment systems. Visit the No
Merchant Account page for details.
Merchant accounts and the Internet are covered in more detail
in our e-book listings.
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