Merchant Account

A merchant account is a type of bank account which is needed to accept credit card payments from your customers.  A payment gateway is always required for you to start receiving credit card payments and when conducting business on the internet you will need an Internet Merchant Account (IMA) as apposed from just a normal merchant account.

Internet merchant account fees are usually higher than offline as there is a perceived increase of risk involved with online transaction rather than face to face.  Because of this you won’t be able to combine your retail face to face merchant account, if you have one, with your internet merchant account.

An Internet merchant account is linked to a bank account, typically a business account, to which merchant funds are deposited or withdrawn. When a merchant makes a sale and puts the transaction through their merchant account, the funds from the transaction are directly deposited into the attached bank account.

Some people get to their local bank to set up an internet merchant account because that’s where they do all their banking but this can be costly to set up with start up and ongoing costs quite high.

Now-a-days there are so many internet merchant account providers which are ahead of your local bank in terms of fees and innovation that an online provider is really the best choice.  Most good internet merchant account providers offer a payment gateway as part of the package.   Combining your IMA and gateway with the one provider can be easier to set up but make sure you compare the costs as often it is cheaper to do them separately.

Internet merchant account fees are usually broken down into three categories: a discount rate, transaction fees, and monthly fees, and fees can vary widely. But don’t worry, the Payment Guru will show you the best merchant account systems out there and you can make your own decision.

Internet merchant account diagram
1 – Your customer enters their credit card details on your online store.  Usually this is done through a shopping cart.
2 – The payment gateway encrypts the data and processes it securely to your internet merchant account.
3- The transaction is reviewed by the customer’s bank to ensure it is ok to proceed with the transaction.
4- The banks answer is encrypted again and sent back to your website.
5 – You then get the result and decide whether or not to fulfil the order.
6 – Settlement occurs when the transaction has completed, which is often determined after the goods have been sent.
7- Customers bank then sends the money to you internet merchant account for payment of the goods or service.
8 – Your internet merchant accounts transfers the payment to your linked bank account.
9- The money appears in your bank account.

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