Online Merchant
Accounts
Most small businesses need an online
merchant account or a third-party payment processor to accept credit
cards or checks online.
Just Getting Started Online?
If you are just getting started online or you expect your
online revenue to be under $1,000 a month, consider a third-party
payment processor. For small businesses or even an individual
seller, there are many advantages to a third-party payment
processor, such as PayPal
versus having an online merchant account. With a third party
provider processing your credit cards and check payments, there is
little to no overhead, easy to qualify, and you can usually start
accepting credit cards online immediately. Click Here for Third-Party Credit Card
Processors and Third-Party Check
Processors.
Online Merchant Accounts
An online merchant account is where a merchant
establishes a bank account with a Merchant Bank for the purposes of
accepting credit card payments from the merchant's customers.
Essentially a merchant account is a line of credit as there is the
risk of credit card chargebacks or credit card fraud. Because of
these credit risks, the creditworthiness of the merchant is an
important factor in getting an online merchant account. The
advantages of having a merchant account versus a third-party
processor is that you usually have more control over your money,
processing fees are lower, overall charges are lower, and you have
more flexibility and payment options. Click Here for featured Online
Merchant Accounts.
How Online Merchant Accounts Work?
Once a merchant accepts a credit card and processes the
customer's purchase as a transaction, how does he or she get the
money and how does it get funded to the merchant's
bank? This is a very commonly asked question, and not really that complicated. There are
four steps to getting your money-initiating, authorizing, completing
the transaction and receiving your funds. The first step
is to initiate the transaction, which verifies that your customer's
credit card is active and the amount of the purchase is within his
or her approved spending limit. This happens in a number of ways,
depending on what kind of business you operate:
Brick-And-Mortar
In
brick-and-mortar, retail or restaurant environments the card is
physically present. To initiate the transaction, you swipe the card
or key in the number through a point-of-sale terminal.
Mail Order / Telephone Sales
In
mail order and telephone order environments, the card is not
present. To initiate the transaction, you enter the card identifiers
the customer has provided you by mail, telephone or fax-these
include the credit card number, expiration date and card
verification or validation codes (the three-digit numbers on the
back of the card). Address Verification Service (AVS)
helps verify street numbers within the United States before
the merchandise is shipped. Be sure to input all your customer's
numerical address and ZIP code information. If you don't have AVS,
contact your credit card processor to add this service to your
arsenal of fraud-prevention weapons.
Internet Sales
In
an Internet environment, the card is also not present. To initiate
the transaction, your customer provides your Web site with the same
card identifiers as a mail order or telephone order transaction.
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