Customer loginThings good to know when setting up a merchant account
Merchant account is an account with financial institution or a bank that allows a merchant to accept credit card payments. A bank that provides merchant account services is called merchant provider.
When paying with a credit card in an online store, a transaction goes thru series of steps. Merchant provider is an important part of this process and a big part of your business success depends on it. Nowadays, there is great number of merchant providers, offering variety of services. They differ by the type and location of services offered, fees, risk and business category, etc. Some known providers are: CreditCall, iTransact, ProPay, Soeasypay (you can find more names on http://en.wikipedia.org/wiki/Merchant_account_provider).
Choosing the merchant provider that is right for you should be thought through process that requires a lot of research. You should consider specifics of your business when looking for a provider; however there are several factors to take into account, common to many businesses:
- Online security. Since Internet-business is more vulnerable to credit card fraud than other forms of business, security should be first on the list. You would like your merchant provider to offer some kind of fraud protection.
- Services offered. Depending on the type of your online business, you might want to check the list of services offered by a provider: whether it accepts international transactions, or provides services for high-risk online industry (travel, ticketing, entertainment, etc.)
- Charges and fees. Rates charged to establish and provide a merchant account vary greatly on a provider. However, there are still several fixed fees, common to most account providers. Among those are:
- Application fee - one time fee, depends on a provider
- Monthly fee – to cover monthly services, can be up to $25
- Transaction fee – a fixed fee charged from any transaction independent on amount charged, usually between $.20 to $.50
- Discount fee – commission rate from a merchant’s earning on discount sales, usually between 2% to 4%
- Chargeback fee – charged when a customer asks for a refund and funds are credited on his credit card account, usually between $10 to $20. Some providers put a limit on a number of chargebacks allowed.
- Miscellaneous fees. Several other fees that may be associated with an account: annual fee, cancellation fee (most accounts request certain number of years of commitment, three is average).
- Other considerations. Is there a limit on the deposit amount? Are all fees and costs listed upfront? When are fees charged (during, before, or after a transaction)? Is this merchant provider trustworthy (you want to avoid providers that had a history of supporting porn or gambling online sites)? You can check Better Business Bureau to get a merchant provider rating.
Merchant providers will also let you know what is required from a merchant to open an account in their bank; e.g. business account, business or a reseller license, proof of a return policy, tax return document, etc. Once your account with a merchant provider is setup, you can start charging and processing credit card in your online store. Once credit card payment is approved, it will take about 2 – 4 working days for funds to be deposited on merchant’s business account.
What merchant provider have you found works best for the online shopping cart? I don’t want to spend a lot of money up front - so I’d be curious to get other people’s thoughts about who is the best to use. Thanks.
Joe
Idaho, USA
Comment by joe — May 26, 2007 @ 9:59 am
Joe,
There is a great number of merchant providers available with various terms and services offered: some provide better rates and commissions, others offer easy sign-up procedure, etc. It’s hard to say which provider will be right for you, however many of our clients use services of Authorize.Net (http://www.authorize.net/) and speak in favor of it. We have also worked with Authorize.Net and were quite happy with their service.
Hope this helps.
Comment by Olga Karpman — May 28, 2007 @ 12:35 am
A small clarification to my previous comment: we have used Authorize.Net services in the past and still do now.
Comment by Olga Karpman — May 28, 2007 @ 12:56 am
Mycompany has set up authorize.net through a provider of their services. We ended up going with:
http://www.capital-bankcard.com
they were able to set us up for free - and our fees are pretty low.
Comment by robert Houser — May 28, 2007 @ 9:15 am
JOE: “What merchant provider have you found works best for the online shopping cart?”
What shopping cart do you use? Most merchants use osCommerce because it’s flexible. Do you have a high risk business? Most high risk merchant account providers would be glad to help you when it comes to online shopping cart compatibility. Authorize.net is good but if you’re going offshore there’s a lot of other choices out there.
Gerri
http://www.highriskexperts.com
Comment by Gerri — July 6, 2007 @ 3:43 am
Do you think it hurts sales when a site visitor is required to temporarily leave the site in order to use a 3rd party e-commerce provider? We currently use a 3rd Party E-commerce provider at http://www.lumensflashlights.com, and are not sure if it is hindering our sales. Any advice will be greatly appreciated!
My e-mail: lumensflashlights@gmail.com
Best regards!
Justin
Comment by Justin V.B. — August 10, 2007 @ 5:01 pm
Justin,
I think it all comes down to the question of whether the use of 3rd party services can potentially affect the credibility of your business. This largely depends on who the buyers are of your online store.
Shop-Script online store software does not use 3rd party services to implement parts of its functionality. Shop-Script is, however, integrated with payment gateways, where customers’ orders are processed on their secure servers. This is the only form of site redirection that customers will see when shopping in Shop-Script based stores.
Comment by Olga Karpman — August 13, 2007 @ 1:01 am
Do you know any company that can provide ecommrce solutions to a Zimbabwean based company at reasonable rates for a small startup company.
I want shopping cart , payment gateway and merchant account
Comment by Gordon — October 4, 2007 @ 5:00 am
I’m sorry, but we do not have any information on this issue.
Comment by Vladimir V. Tuporshin — October 4, 2007 @ 5:08 am
Gordon,
Are you in Zimbabwe?
Comment by Justin V.B. — October 18, 2007 @ 12:19 pm
Do you know anything about setting up a tobacconist store. If so how would you go about it and what laws will be affecting you.
Comment by Dustin Rhodes — December 12, 2007 @ 5:31 am
I’m sorry, but I can not help you in this question. If you are interested in accepting payments for tobacco products, contact your merchant account provider.
Comment by Vladimir V. Tuporshin — December 12, 2007 @ 6:09 am
I have a module/script that was especially written for me to work with Zencart.
Now that I have changed to SS-Premium I was wondering if it will work. I can send the short php file to you if you wish so you could tell me if it can be altered to work??
Thanks
Shelley
Comment by Shelley Burke — January 18, 2008 @ 6:38 am
Your Zencart module will not work with Shop-Script becuase these are completely different software products and platforms.
For Shop-Script you will need to create a new module or rewrite your existing Zencart module — it requires php programming skills (I’m sorry, but it is impossible to tell in two words how to do this).
Comment by Vladimir V. Tuporshin — January 18, 2008 @ 6:45 am
In the future, please send such questions to support at shop-script.com rather thatn posting to blog. We do not provide support in blog.
Comment by Vladimir V. Tuporshin — January 18, 2008 @ 6:46 am
Tabacconist merchant account, I can help.
Comment by Brock Amos — January 21, 2008 @ 2:49 pm
brock@primuspayment.com
Comment by Brock Amos — January 21, 2008 @ 2:49 pm
If your business is considered high risk, an offshore merchant account may be the perfect solution.
Comment by Tina — February 7, 2008 @ 7:41 pm
Is out there any known software tools for Payment Gateways (or merchant providers as you called them here)?
I am interested in create such a company here in my country where the only company providing this service is using old-fashioned methods.
Thank you. Great article btw,
Comment by Yonny — February 11, 2008 @ 2:07 pm
Yonny, I’m sorry, can’t help you in this question — we are not familiar with this kind of business. I think it’s not only software, but a lot of work with your local banking system. Custom software development will be required for sure.
Comment by Vladimir V. Tuporshin — February 12, 2008 @ 1:57 am
Great post! I have been involved in the payment processing industry in Canada for around four years now and it is important for merchants to do their due diligence before choosing their merchant account provider because agreements with most companies are minimum three years with typically a $200-$300 early termination fee. Better to take a little bit more time shopping around and do it ‘right’ the first time then having to go through the hassle of doing it twice.
I created this free report that is titled “17 Essential Questions Every Canadian Small Business Owner Must Ask Before Choosing A Payment Processing Provider” - if you are Canadian Business Owner, I think you’ll find this as useful resource when shopping around.
Hope it helps!
Comment by Matthew Hunt — March 15, 2008 @ 6:51 pm
I am also in the merchant account industry and I also have a special site helping newcomers to this specialized field. Check out payment processing.
Comment by Mark — March 17, 2008 @ 9:45 pm
Snx for you job!
It has very much helped me!
Comment by insirmactiomo — March 20, 2008 @ 4:46 am
We are starting a small home-based biz and want to accept credit cards through our shopping cart software (we are seriously looking at this Shop-Script Premium and a great option) but this whole merchant account stuff is way beyond me. Has anyone found it hurt their business to accept payments through PayPal as the only online payment method? Or is the merchant account not as difficult and costly as it appears to be?
Comment by Cindy — March 27, 2008 @ 12:15 pm
I Shop-Script Premium has Paypal Payments Standard module. I am wondering why WebAsys or PHP Shopping Cart is not on their Website Payments Standard Compatible Carts list.
Furthermore, I am testing the Premium version out. I would like to see if I can buy something with the shopping cart that I created, but it says, “There is a problem with this website’s security certificate.” When I press Continue in the Checkout page.
Is it because I have a personal Paypal account? Is there something my ISP need to install? Is it because it’s a trail out version of Premium? Do I need to buy it before it works?
Regards,
Tammy
Comment by Tammy — April 21, 2008 @ 12:29 am