eCommerce Merchant Account – How It Works

May 20, 2022 / Posted in Credit Cards

With the advent of the Internet and online shopping, new ways of processing digital payments had to be introduced. Retailers had to meet the requirements of customers who wanted to purchase different goods online. The expansion of the customer base brought about the use of an eCommerce merchant account. Any enterprise that sells goods and services online is required to have one since it is designed for accepting cashless payments.

So, how does a merchant account work? When a customer purchases online, the payment has to be first processed in order to be credited to the merchant’s bank account. So, the processing company makes sure to subtract processing costs and sort out any issues before proceeding to transfer the transaction amount. The card issuer then receives a payment request from the bank. The issuer next subtracts its own costs and credits the processor’s account. In the end, a monthly statement is sent to the cardholder.

What is an eCommerce Merchant Account?

Since these accounts are used for accepting various types of eCommerce paying options, from debit and credit cards to over the phone and in-person payments, they function as special types of bank accounts. They are primarily intended for merchants who accept cashless payments. The merchant services provider can help sellers make transactions safe and effortless.

The merchants don’t have direct access to them, and they cannot withdraw or deposit funds from them. However, merchants receive processed funds when the credit card processing company credits their business banking accounts. This means that a merchant account is an intermediary between the customer’s payments and your business banking account. By creating one, you will have an opportunity to acquire payments from all over the world.

A woman with a card and a laptop

Who Can Open an eCommerce Merchant Account?

They are primarily intended for different types of businesses and owners who offer goods on their websites. It has been made possible for customers from all around the world to pay for any service or item they see online. So who are the sellers that require a better way of managing transactions:

  • Crafters with handmade goods,
  • Artists and artisans,
  • Digital creators (content creators, actors, and musicians),
  • Retailers that sell clothing, gear, shoes, and accessories online,
  • Subscription businesses.

A seller can opt to get credit card processing services which include an array of paying solutions such as financial consulting, good customer service, mobile notary service, and the possibility of opening digital accounts.

Why Should Businesses Owners Get One?

One of the best advantages of having digital accounts is that the eCommerce merchant account provider will do the job of getting any transaction processed on your behalf. The seller is only obliged to pay a fee for the service. You will never have to wait on customers who might never pay their bills because they have no finances.

The benefit of this service is that you will always be provided with the funds from the processed transactions. You won’t deal with clients since the only one who has to deal with issues that might arise during the transaction process is the service provider. Also, a great benefit is that it wouldn’t take you a long time to build an income for your store.

Even though these advantages are great for someone who is looking into the best credit card processing for small businesses, there are extra fees that have to be paid for having access to it.

What Fees Can You Expect?

The companies you will be working with will determine how much the service will cost. There are a couple of fees that are an essential part of opening accounts. Here is what you should look out for:

Setup Fees

The company will most likely require the enterprise owners to pay upfront for setting up everything for them. However, many providers can only give you the price of the setup based on a quote. This means that you would first have to reach out to the provider and ask for a quote. Your setup fees will be based on yearly or monthly sales volumes and on having POS hardware (or not).

Transaction Fees

The most important fees are the transaction fees because they determine how much will end up in your own finances. Bear in mind that card issuers, networks, and processors subtract their own cut for the transactions. The type of fees you will be obliged to pay is determined by what type of enterprise you run, whether it’s a high-risk business, and the type of payment processor you want to use.

Maintenance Fees

These fees are kept separate from the ordinary transaction fees. These fees are based on merchant services and benefits you receive from them, such as reporting. They are monthly costs as well as flat costs.

A hand holding a credit card

How to Choose a Provider?

Let’s say you have a small business idea, or better yet, an already successful enterprise, and now you want to hire a provider. How should you go about these tasks? Well, when deciding on the right provider, you will need to be careful during the selection process.

It is quite simple to type into the Google “merchant services credit card processing” and take your pick from the first companies that appear. Research everything you are unfamiliar with so you can gain a better understanding of how credit card processing works. Before making a final decision, you will have to call the customer support agents.

Still, the best way to avoid issues is to read the contract carefully before signing anything. Try to get as many details and information as possible from the processors’ representatives so you can ensure that you are choosing a high-quality provider. Read reviews and comments from other merchants who have experience with a particular provider.

Here is a video on what can you expect from traditional accounts as opposed to PayPal, Square, and Stripe.

What Should You Do to Set it Up?

First, you will need to provide the company with basic information about your enterprise. The company will likely need you to provide your business name, tax information, and contact details. This will be a form of the underwriting process. Next, you will have to provide them with information about your funds, financial statements, articles of incorporation, PCI compliance, and routing details. Before getting started, you will want to prepare your business license, business policies, and marketing materials license so that the provider can check if everything is in order.

Before you get everything set up, read the terms and conditions of the contract before signing everything. It would be best to read the contract thoroughly so you don’t miss any important details. Early on, request your processor to provide you with a merchant statement regularly so that, based on the new data and information, you will be able to grow your enterprise.

A man holding a credit card

What Are Key Parts that Support Your Digital Account?

Certain features make it easier for people to shop and for sellers to receive processed payments. Key components such as gateways, online shipping carts, support for multiple payment types, and shopping cart integration are what merchant services are all about. They make using digital accounts for controlling finances worthwhile.

What Are Payment Gateways?

Payment gateways serve an important role as they represent intermediaries between your provider’s processing network and your website. These payment gateways make it possible for transactions to get to the provider’s network so that the purchase gets authorized, and then the transaction fees can be subtracted. For instance, a free POS system is used as a gateway for brick-and-mortar enterprises.

Gateways have valuable features that you and your customer can benefit from. With gateways, your customer’s debit card information is protected by security protocols. You will have an opportunity to store your client’s data, such as name, shipping address, and billing address in a database, so they don’t have to fill in their information every time they want to make a purchase.

Also, getting gateways that support automated recurring payments would be the best option since they can create specific billing plans and update subscription information automatically. This will make it easier for your clients to keep track of their purchases.

A person looking at a phone and holding a laptop

Why Are Online Shipping Carts and Shopping Cart Integration Essential?

Shopping cart integration is a vital part of online shopping since it allows the seller support in accounting, inventory, e-mail marketing, and handling all of the orders with ease. With shopping cart integration, you will gain access to customer data. In this way, you will be better equipped to make your online operations more efficient and effective.

Of course, shopping cart integration wouldn’t be possible without online shopping carts on your website. The shopping cart software used to display your products provides the clients with basic information about your product. They can customize their order with the help of this software. For instance, they will be able to choose a specific color and size of the product. Shopping charts enable the clients to enjoy a more convenient and stress-free shopping. What is more, it is of great importance to choose a shopping cart that will integrate well with your gateway.

It’s Vital to Have Support for Multiple Payment Types

If you want to grow your businesses and reach as many customers as possible, it would be best to get a system and gateway that support multiple paying options. You have to expand on the available online methods of paying, such as credit, debit cards, and digital wallets (ApplePay, etc.). In case you have a subscription-based enterprise, it would be wise to take into consideration eCheck/ACH options. Also, for enterprises that operate internationally, you should look into options that are available in other countries.

A man paying with a card and pos machine

Bear in Mind the Potential Risks

Some enterprise owners hire companies that will process their transactions without delving into risks and issues that might occur. When the enterprise operates only on cashless payment methods, there is always a risk of fraud and privacy issues. Also, many business owners make the mistake of opening accounts for merchants and target customers in countries that don’t use the cashless system. What is more, banks tend to charge chargeback fees which can lead owners to increase the costs of their products. In the end, they can risk losing expected profits.

Even though there is a certain risk involved when investing in services for merchants, the enterprise owner can always take certain measures to protect their profit. For instance,  hiring competent merchant processing companies with good credit card fraud prevention will lower the risk of dealing with thefts, fraud, losing goods, and profit.

Are You Ready to Invest In Payment Processing Services?

Once you’ve finally made a decision to hire a trustworthy provider to process your online transactions, don’t hesitate to contact us and get more details about the system. We will help you fully understand how merchant service rates work. Also, you will have a chance to ask us any question you have, such as – what the average credit card processing fees are? Our company will ensure that you receive the best eCommerce merchant account solutions and cut down your fees from 20% to 50%. So, give us a call, and we’ll do the rest.


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