Having a reliable and secure ecommerce business is essential for success in 2023 for most companies. Customers will be hesitant to make purchases online without an effective, simple and safe payment solution.
A good merchant account can make or break your eCommerce business, so it’s important to ask the right questions before signing up with any given provider.
Virtually every credit card processing company offers a similar set of services that are designed to meet the needs of small businesses that operate ecommerce sites.
That means there are only a few key differences between them. The best question to ask yourself is not “Which one should I choose?” but rather “What kind of merchant account do I need?”
In this blog post, we’ll lay out the different types available and explain why you might need one over another—or even several—in order to build your ideal ecommerce business.
Table of contents
- What is a Merchant Account?
- What are the Different Types of Merchant Accounts?
- Should I Do Something?
- Basic Merchants Accounts
- Selective Merchants Accounts
- Final Word
What is a Merchant Account?
A merchant account is a means of accepting credit and debit card payments online. Merchants set up their own merchant accounts in order to accept payment for their products, services, and subscriptions. It’s also the gateway that connects your ecommerce site with clients who purchase using either a credit or debit card.
A merchant account is required for any business that accepts payment methods like credit cards or PayPal. If you’re operating a business that doesn’t need to accept these forms of payment, then you don’t need an online merchant account.
A merchant account will require a company bank account or another form of the financial institution that has the ability to process payments from customers online. For example, if you are going to sell furniture online, you would be required to have your own checking account as well as your own merchant account.
Ok, so here’s how to figure out which type of merchant account is right for you…
What are the Different Types of Merchant Accounts?
Merchant accounts fall into three main categories: merchant processing, gateway merchant accounts, and virtual terminal accounts. Let’s take a look at each one of these types of merchant accounts to help you decide which is right for you.
Should I Do Something?
TLDR; Do Something
The answer to this question depends on your business. If you already have a credit card processing company, it’s never a bad idea to trade up and switch to one that offers additional features. If you don’t currently have a merchant account, then the answer is definitely “yes.”
But before you jump right into that decision, make sure to ask yourself these four important questions:
- What kind of merchant account do I need?
- Do I know how to operate my own merchant account?
- How will I handle PCI compliance?
- Will my credit card processor charge me monthly fees or cancel me with no notice due to nonpayment?
If you have answers in the “YES Column” for these questions, then it’s time to find the ideal provider for your ecommerce business. From there, it’s just a matter of signing up for the best possible rate and getting started!
Basic Merchants Accounts
Some of the basic services offered by a typical merchant account are:
- Access to major credit card networks
- Acceptance of various currencies
- Billing and payment reports
- Security services
- Free report templates and instructions for merchants who have no experience with ecommerce.
Selective Merchants Accounts
One of the most important aspects of a merchant account is the ability to selectively process payments. With most traditional merchant accounts, you’re locked into processing all transactions (and paying fees for each transaction) on your site.
That’s not always desirable—especially if you have a large number of customers and want to focus your efforts on specific products or services. That’s where selective merchant accounts come in.
With these types of accounts, you can set up rules based on payment type, amount, category, etc., so only certain payments will be processed through your account.
There are many different types of merchant accounts available, ranging from high-priced solutions to free and no-cost options.
The best question to ask yourself is not which one you should choose but rather what kind of merchant account do I need.
Better questions lead to better answers (My Dad told me that a long time ago)
What are the benefits of using a merchant account?
A merchant account is your key to accepting electronic payments and credit card processing in your eCommerce business. It allows you to accept credit cards, debit cards, and other forms of payment from customers.
Merchant accounts are a crucial part of any eCommerce business, as they allow businesses to profit from the sale of their products and services. Merchants can collect money through the sale of their products and then use the funds to cover operational expenses, such as the cost of inventory, shipping fees, taxes, and fees from credit card processors.
When choosing a merchant account provider, it’s important to look for a company that has experience in the eCommerce industry and is well-respected by merchants. You also want to ensure that the provider has excellent customer service and support team so that you can get help with any problems that arise.
What are the main benefits of using a merchant account?
A merchant account is a type of credit card processing company that allows businesses to accept credit card payments directly. Although there are a number of benefits to using a merchant account, one of the most significant is that it allows businesses to process credit card payments without worrying about chargebacks.
A chargeback occurs when a customer requests their credit card company to reverse a payment that was previously made to your business. It is the ultimate nightmare for any online seller who has ever made a sale. When a customer successfully files for a chargeback, it often results in fees from both the issuing bank and the card company that add up to several hundred dollars.
Fortunately, with a merchant account, you will no longer have to deal with chargebacks. Instead, your business can focus on providing customers with the best possible experience.
Another benefit of using a merchant account is that it can significantly lower the cost of doing business. Most credit card processing companies offer discounted rates for businesses that order in bulk or agree to higher processing fees. With these discounts, you can potentially save tens or even hundreds of dollars each month on your overall processing expenses.
In addition to these financial benefits, a merchant account also provides added security and peace of mind. You will be able t process credit card payments without worrying about fraud or stolen cards being reversed against you by your customers.
Finally, having a merchant account can give your business an edge over your competitors in terms of customer service and experience. Having the ability to resolve customer issues quickly and efficiently can go a long way toward building trust and loyalty with your customers.
What are the key features of a merchant account?
A merchant account is a credit card processing system that allows a business to accept payment from customers for goods or services sold online. Your business will use the processing service provider’s credit card terminal and banking services to process credit card and debit card payments.
A merchant account provides the following services:
- Accepts credit card payments from customers.
- Process credit card and debit card transactions directly with the banking institution, not your employees.
- Storing customer data such as name, address, and payment information.
- Managing customer relationships.
- Issuing receipts for sales tax and shipping charges to customers.