Also see: Online Payments
Merchant Accounts
Merchant Account
companies have partnered with the credit card companies to offer card
processing equipment and services to businesses ("merchants"). These
merchant account providers enable the business owner to process individual
credit transactions by consumers throughout the world.
The "merchant" is the
actual sole
proprietor, store, business, or website providing the goods or services,
and they pay the fees charged by the organization or credit card company
offering the merchant account.
With a merchant account,
you take credit card numbers and orders directly from your customer online, over the phone or in
person. If you process credit card orders over the web, you should
only store sensitive customer information on secure computers. While
some people merely use a firewall, to prevent hacking, this information
should ideally be stored on computers that are physically separated from
the internet.
Merchant
Accounts vs. Online Payment Sites
Both online payments and
merchant accounts enable sellers to accept credit cards for auction
purchases.
If a seller's business is
limited to the internet, then they are probably fine with just an online
payment service like
Paypal,
Ikobo or
StormPay. But if a seller is doing a lot of business
in the real world and needs card readers, mechanical card swipers and
real-time credit card processing and authorization, then they probably need a
merchant
account.
Merchant account programs
are often harder to be approved for, and sometimes have more fees.
They are generally more expensive to operate than an account with a
standard online payment site,
but not always.
They also have a more
lengthy application review process. After all, you are dealing
directly with the big credit card companies, or a middle man
representing them, and merchant acceptance standards are high. There is a detailed
credit check, and your business might need to meet certain
characteristics of sales volume, licensing, etc.
Why is the process to
obtain a merchant account so involved? Remember how long
it took to receive an answer the last time you applied for a personal credit card? Now imagine
that you are going to be
a business owner accepting those same types of cards from hundreds or thousands of people- the
credit card issuers want to make sure that you know what you're doing
and can be trusted.
With an online payment
service, the difference is the website is technically the merchant,
acting on your behalf. They process the card and accept payment,
and then transfer the money for the sale to you less any fees.
With an online payment sites, there's still an application, but due
to the lower level of risk for them, it's a far less complicated process
for you, and
almost everyone who applies gets accepted.
Do you want the added
features of a full service credit card acceptance program? This is
called a merchant account, and is sponsored by Visa, MasterCard,
Discover, American Express and other credit card companies.