Recent years have seen a huge explosion in ecommerce and huge volumes of internet sales. Any company which sells direct to the consumer will undoubtedly make taking advantage of this millions-strong army of potential customers top priority.
Getting an ecommerce website is a great start, but to truly tap the potential revenue streams of internet based selling you’ll need an internet merchant account.
Providing your customers with a secure, reliable and convenient payment gateway not only adds to the customer experience but also maximises the number of visits to your site which convert into sales. Online merchant services provide just such a gateway and minimise your costs too.
If you want to find out more about internet merchant accounts, simply continue reading the information on this page. If you want to start comparing quotes today though, you just need to fill in the form at the top of this page.
Comparing quotes with Approved Index is free, quick and easy, and it could save you as much as 40%.
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How Do Internet Merchant Accounts Work?
An internet merchant account is provided by a bank or dedicated merchant account company. They consist of two elements: the merchant account itself and the payment gateway.
The merchant account is a special type of bank account that allows you to accept credit and debit card payments. The payment gateway provides the software which processes card transactions by collecting the card holder’s data and communicating with the card issuer to authenticate and authorise the transaction.
Internet merchant account providers usually provide both the merchant account and payment gateway for securely processing credit and debit card transactions. The internet merchant account provider will pay the resultant funds from these transactions into your business bank account, less the payment processing fees, after a suitable holding period during which the payment is verified.
Most internet merchant account providers will also provide a web based control panel so you can monitor transactions and generate comprehensive reports.
Online Merchant Service Benefits
As well as cutting down the time and administrative burden of taking payments by cheque or bank transfer, internet merchant accounts also offer the following benefits:
- Multi-currency payments - Take card payments from anywhere in the world with currencies automatically converted.
- Security - Anti-fraud measures and encrypted connections not only minimise your chances of being a victim of crime but also give your customers peace of mind, increasing the chance of sale completion.
- Process direct debits - Service providers have the option to set up customer direct debits through their website.
- Reporting tools - Get all your online sales data at the click of a mouse through account management software.
- Integrate with MOTO - Combine your internet merchant account with mail order and telephone sales to maximise your potential customer base.
Comparing Internet Merchant Accounts
Different online merchant account providers obviously differ in the services they provide. When looking to obtain an internet merchant account consider the following:
- Standing charges - Most internet merchant account providers will charge a monthly fee for the provision of a payment gateway (separate from and in addition to transactional charges applied by card associations like Mastercard, Visa etc)
- PCI DSS Compliance - This is the industry standard for internet merchant account providers, ensuring high data protection and security standards
- High risk provision - Some businesses such as online dating, travel agencies or high volume eCommerce are considered as being high risk by some internet merchant account providers who consequently charge more. Check whether a particular provider considers your business to be high risk.
Accepting Online Credit Card Payments
Today, making and accepting debit and credit card payments online is routine, in fact it is difficult to perceive life without it. Naturally this hasn’t always been the case; e-commerce has been around for just over 44 years, though over that time its growth has been relentless and it continues to grow.
At first people were slow to embrace e-commerce over security concerns, but in 1994 Netscape developed Secure Socket Layers (SSL) security encryption protocol which gave browsers the ability to discover if websites were secure and could be trusted. This was a vital development and versions of it are still used today. Without SSL (or a similar technology) secure online credit card processing would be impossible. From then on into the new millennium the growth of e-commerce was unstoppable.
Amazon launched as an online bookseller in 1995 and in 2013 it produced revenues of $74.45 billion. Other big success stories were eBay which launched in 1995 and Google in 1998. PayPal, which was launched in 1998 and operates as an acquiring bank that carries out payment processing for commercial users such as online merchants and auction sites, last year enabled sales volumes of $200 billion.
Processing Payments with a Payment Gateway
An e-commerce payment gateway is a service provided by a card processing company that allows merchants with e-commerce websites to accept credit cards online.
There are two basic models:
- The simplest is a hosted solution in which the merchant website connects to a payment page that is maintained on the provider’s website. This is the most popular solution for merchants with smaller sales volumes.
- With the second and more complex model, the merchant maintains the payment page on his own website and collects the credit and debit card details directly. The card processer then authorises the payment. This is the more appropriate model for merchants with high sales volumes.
Hosted Payment Gateway
With a hosted debit and credit card gateway, your service provider collects and stores your customers’ card details through a payment page that links to your shopping cart. When your customer wishes to check out, he or she leaves your website and is redirected to the hosted pay page where their details are entered and the purchase completed. The payment processor then forwards the transaction details to the card company, for instance Visa or MasterCard, from which it receives a card approved or card declined response. The cardholder then returns to the merchant website.
The advantage of this model is the card processor has the responsibility for keeping credit card details secure. Thus, in most cases, it is not necessary for the merchant to have as high a security level as would otherwise be required as there is no connection between the merchant website and customer’s card information.
In most cases, when you sign up with an online payment services provider you are given the option of customising the payment page. This might be simply adding your logo, or there might be other customisation options. The page will also include the service provider’s brand, which can help increase your customers’ sense or security.
Merchant Maintained Pay Page
There are many advantages for merchants to maintain their own payment pages on their own website. This means that customers are not redirected to another website, and the purchasing process is smoother while providing a more professional feel, as the payment page is fully integrated with the website. However, this means the responsibility for the security of customer card details belongs to the merchant.
When a customer checks out, he or she enters their card details on the merchant website and when she wishes to complete the transaction, the merchant’s server sends the details securely to the card processor for authorisation using SSL (Secure Socket Layer) encryption. The authorisation process is similar to that described previously.
PCI DSS Compliance
Merchants who wish to maintain their own payment pages must maintain a high level of security and must hold a PCI DSS (Payment Card Industry Data Security Standard) certificate. In order to qualify the merchant must:
- Use a secure network including a firewall to protect cardholder data and use bespoke system passwords and additional security parameters
- Protect cardholder data and ensure that transmitted data is encrypted
- Minimise vulnerability by maintaining up to date anti-virus software and other security systems and applications
- Control physical and electronic access to sensitive data
- Track and monitor all access to cardholder data and routinely test security systems and processes
- Maintain an Information Security Policy
Merchant Account Virtual Terminal
With an IMA it is also possible to carry out virtual terminal credit card processing. A virtual terminal is a secure web page that allows you to process credit card details online, for instance when you take them over the telephone or by mail order.
It is also possible to use a virtual terminal without an IMA, in which case it is called a MOTO (mail order telephone order) account. Getting one is a similar process to obtaining an IMA as similar risk levels apply.
Finding an IMA supplier
Whether you are looking for an e-commerce solution with an IMA and payment gateway or you simply need virtual terminal credit card processing, we strongly advise you to shop around to find the best deals for your business.
Different suppliers have different attitudes to risk, and there can be a large variation in the fees they charge. By shopping around and finding the optimum solution you can save your business a considerable amount of money.
An IMA isn’t the only solution; an alternative is to use a payment processor such as PayPal or Paysafe that will process payments on your behalf without requiring you to have an IMA. While this is easier and faster to set up, the downside is the fees that you will be required to pay on every transaction will be higher than those charged to IMA holders. There may also be limits on the amounts that can be processed and sometimes there are delays in transferring payments to your business account.
Compare Internet Merchant Account Providers
This page has been designed to provide businesses with information to help them understand the processes behind online merchant accounts and online payments. To find out more bespoke information though, it is important to speak to suppliers today - Approved Index can help here.
Comparing merchant account quotes with Approved Index is free, quick and easy, and it can save you as much as 40% on your set-up costs and fees.
Compare Internet Merchant Account Providers Today