How To Setup Merchant Account Details
Introduction:
A merchant account is the connection between a business and a credit card processing company. They're necessary for businesses to accept credit cards in exchange for goods and services. This article will teach you the basics of setting up your merchant account details needed to get started accepting credit cards from customers. It will cover things such as what is a merchant account, what are the different types of accounts, where can you sign up for one, how do they work, how much money can you make through them? If you're looking to start your own business or just need more information on this topic in general then I recommend that you read this article.
What is a Merchant Account?
Well, as I already mentioned, a merchant account is the connection between a business and a credit card processing company. It's the official link between your business and your customers. When you accept credit cards online for payments, transactions, or to help grow your business you're actually using that link to make those transactions happen.
So what are some benefits to having someone do the processing on your behalf? For starters you don't have to worry about building out your own infrastructure for storing customer information or protecting it from potential hackers (not that anyone could really crack it these days). You don't have to worry about managing your own database of customers and orders or how it fits into your overall business. And you don't have to worry about paying for large credit card processing fees from an outside company, this is usually called a merchant account fee.
What are the Different Types of Merchant Accounts?
The different types of merchant account typically fall into one of two categories; either they're set up as a standalone credit card processing company or they're integrated with another type of service like online shopping and billing.
A standalone merchant account is generally what most beginners start out with when setting up credit cards online. They sign up for a monthly recurring fee from the processing company and that's it. The merchant account company handles everything from taking their payments, processing them and sending out the receipts to customers. The next time a customer places an order with you your merchant account company will collect the payment and store it for you.
A integrated merchant account can be a bit more complicated because you're linking other services to your account, but it works really well in most cases. A good example of this is an online store that wants to accept credit cards as well as have the ability to make online purchases and ship products straight to customers through their website. An integrated setup process might involve connecting your customer database with their shopping cart software and shipping software or including credit cards in other areas of their website via a drop down menu or form.
Sounds Great, Where Can I Sign Up?
The best place to find a merchant account setup for your business is going to be online. With a little bit of research you should be able to find several options that fit your business's needs and price range. Some popular sites that offer these services include reputable companies like PayPal, Google Checkout, 2CheckOut and others. You can also search around for other smaller companies if you have more specialized requirements or just want to save money on your merchant account fees.
How Do They Work?
It's not completely necessary for you to understand exactly how a credit card transaction is registered and the payment processed but it's good information to know if you plan on accepting online payments in the future. So here we go!
Every credit card has a unique number that identifies it as a specific card. It's called the Primary Account Number (PAN) and this is the number you will give to your customer when they want to pay for something online. Your merchant account company will take that number and process the transaction to make sure it matches perfectly with that customers information. This information is stored in a database that connects to your customer's credit card info, their name, phone number, billing address and other identifying details. If everything lines up then your merchant account company processes the payment and stores it for you so you can send out a receipt.
Now, what happens if the customer forgets to enter their billing address or the information doesn't match? Well, in that case the transaction will hit a number of automated processes called authorization levels before it actually gets submitted to your merchant account company. This allows them to double check that all of the information is correct and that you're ready to receive payment for a purchase. Their goal is to make sure you don't get scammed.
So why does this happen? Well, credit card fraud isn't quite as commonplace as people think but it still happens on occasion. Some people may use stolen credit cards or those with fake addresses and phone numbers to make purchases. Or maybe a customer has been shopping online from a cheap stolen account and for some reason the information isn't matching. These are the types of things that the automated authorization levels will go through to ensure that you're not left holding the bag.
So now that we understand what a transaction is and how it works between your customers and your merchant account company, let's look at one more thing; interchange rates.
Interchange Rates
Credit card processors have to pay a certain amount of money to other credit card processors every time they charge someone on their network a purchase. This is to help cover their expenses as well as make sure they get paid in full for every payment made on someone's card. It also helps them to keep a consistent level of interest on the funds that they hold or "merchandise" for you.
The interchange rates vary between different processors but they always have to pay at least one cent for each transaction. For example, if your merchant account company charges $15.00 for a transaction then they'll have to pay each processor $14.95 to make sure that they don't lose money so you don't have to.
All credit card processors will charge a certain amount of this transaction fee for each transaction, but you'll want to find out exactly what that is before you accept online payments with your business.
So now that we've looked at how a credit card transaction works and have a general idea of what merchant account fees are, it's time to learn how to actually get them if you want to start accepting online payments.
How Do I Get Accept Credit Cards Online?
You don't have to get set up through an outside service like PayPal or 2CheckOut if you really want to try your hand at it on your own. There are several ways you can go about setting up a merchant account for yourself and accepting credit cards online from customers.
Conclusion
There are a lot of variables to consider when it comes to accepting credit card payments online. It's important that you are careful with your selection, because the last thing you want is for your business to be responsible for fraudulent purchases. If you need help setting up an account or are having problems with fraud, there are several ways you can get in contact with a merchant account service that can help you out.
Good luck!
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