For those of you who are unfamiliar with how an internet merchant account actually works, I thought I would provide a short explanation of what is involved in accepting credit cards through a website.
An internet merchant account is an important component of a functioning business website. Without a merchant account, your options to accept payment from your customers are extremely limited and will have an adverse effect on sales. However, selecting a service can be a headache. A quick search online turns up thousands of results for “merchant account.” With all that, how can you know which credit card processing company to choose? Knowing how merchant accounts and online processing work can help you make an informed decision.
There are actually two components to accepting credit cards though your website. The first is the merchant account, which is really just an account with a bank or other financial institution. Most local banks don’t provide this service, due to the risk of credit card fraud. Because of this, it’s usually necessary to use a specialty provider of accounts for the Internet.
The second component you’ll need is a payment gateway. While the internet merchant account allows you to accept payments, the gateway is what actually transmits the customer’s order. It permits you to accept the customer’s actual billing information and do all the validation that’s required to avoid fraud.
To make sure things go smoothly, ask any prospective internet merchant account provider about compatibility between your shopping cart and the payment gateway. Not all of these are easily compatible, which can cause problems or delay. Also look for AVS, or Address Verification System, protection. This verifies the billing address with the owner of the credit card. You should also ensure that your prospective merchant account provider has adequate security precautions in place.
In the second part of this article, we’ll go through the process of what actually happens when a customer orders a product or service from your website.