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Accept Credit Cards Online

Boost your web business - start accepting credit cards

Today, Internet is a preferred medium of buying and selling products as it is fast and convenient and easily accessible. For an e-business, it is essential to be able to accept payments online by processing credit card information. This has to be done while maintaining the customers privacy and security of the information as well as safeguarding the merchants business interest.

A business needs to set up a merchant account in order to start accepting online payment. There are many companies that are authorized merchant account providers, as they would have secured permission from Visa and MasterCard to accept credit card payments.

What is a Merchant Account

Merchant accounts allow business to accept and process credit card transactions locally as well as on the Internet. A business can create a merchant account by getting in touch with its bank or any other merchant account provider. These merchant account providers are generally financial institutions that can accept credit card payments. For new business owners, the bank might not be such a good idea, as they require the large volume of average monthly sales. Web-based service providers businesses need to have a merchant account in order to perform online transactions. Merchant account services include creating a merchant account, managing the account, sending monthly statements and troubleshooting the account related problems.

The merchant account provider usually sets up a merchant account for a fee and charges a monthly or yearly fee to manage it, send account statements and provide support. Every time a customer makes a transaction through the merchant, the merchant account provider will charge a processing fee. It is generally between 2.5 and 5 percent while for special kind of cards, a higher charge may be applied. To set up an online merchant account, businesses need to have their websites. They can then register with a merchant account provider for a merchant account.

Merchant Account Providers

All merchant account providers have their own websites. This enables any business to apply online for a merchant account. These website are very user friendly and declare the status of the merchant account request within 24 business hours. Some websites even provide complete ecommerce solutions such as setting up secure online payment gateways with proper data encryption. This is essential for ensuring the security of a customers credit card information.

This works on the same principle that is applied when a customer swipes his or her card on the machine provided by the bank to the merchant. While performing an online transaction, customers enter their credit card information online. In both cases, this credit card information is sent to the merchant account provider, who then verifies it. This is done to ensure that the card is valid and there are sufficient funds in the customers account to cover the transaction. Once this is verified, the merchant receives an authorization code, which is stored in the system for later use.

Merchant account providers charge the merchants a pre-decided amount every time customers swipe their cards on the credit card terminal. This can vary from 2.5 to 5 percent per transaction depending up on the type of business and the agreement. At the end of the day, the merchant can send all the requests together to the bank. In the next two to three business days, the money is electronically deposited in the merchants bank account.

Choosing Your Merchant Account

Merchant accounts are usually of two types that are known as card present and card not present. Card present transactions are the usual credit card transactions where the merchant physically swipes the credit or debit card. In card not present transactions, the credit card number is entered through the terminal. This option is also useful when a customer is unable to get the card swiped due to any reason even though the card is physically present. In this case, the merchant can take the imprint of the card along with the customers signature and card numbers are keyed into the terminal.

As per the law, online transactions need to use card not present transactions, as the customers credit card is not physically in front of the merchant. Therefore, card not present transactions are considered risky as the chances of credit card fraud increase. A higher discount rate is charged merchant account providers who offer this type of service. However, companies that are planning to put their business online, which already have a credit card processing terminal, must consult with their current providers before entering card not present transactions.

Banks are usually considered secure and reliable merchant account providers. They usually allow business organizations to open a merchant account on the basis of their credit rating. Independent sales organizations are usually referred to as third party merchant account providers.

How to Apply for A Merchant Account

It is very easy to apply online for a new merchant account and approvals are usually quite fast. Most merchant account providers claim that they would provide the status of an online application with 24 hours. Some merchant account providers charge a set up fee where as some do not. A monthly or yearly charge is also applicable to pay for services such as customer service, monthly statements and maintenance of the account. To set up a new merchant account, a security deposit may be called for, which is refundable in most cases after a fixed period of time. All these details will depend on the agreement between the merchant and the merchant account provider.

There are many websites available that help businesses compare and choose the best ecommerce merchant account for their needs. It is advisable to get estimates from different companies and compare the services provided by them and the fee charged for those services. Sometimes the businesss bank might be able to offer competitive rates for setting up and maintaining a merchant account.


Merchant accounts are created to enable a business to accept and process credit card transactions. However, before entering into a partnership with a merchant account provider, business owners must take time to understand the various components of merchant account and the types of providers. There are many types of merchant account providers available in the market such as banks, independent sales organizations and merchant service providers. Hosted merchant accounts are those merchant accounts that provide online service and are managed by merchant account provider. Some merchant account providers also offer to host the website and create features such as shopping carts for their clients.

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