Opening an Internet Merchant Account
An online merchant account enables your web-based store accepting credit card payments. Taking a small percentage from each sale, merchant service providers transfer payments made from business transactions into a merchant's bank account. An online merchant account is a must for web-based businesses, as it enables customers making credit card payments. It can also be used alongside shopping cart and payment gateways. In e-commerce world, an online merchant account serves as a third party between the website and credit card processors.
Nowadays customers prefer making purchases with the help of their credit cards, thus accepting credit cards online is very important. Statistics shows that the use of credit cards for online transactions helps increase profitability by as high as 52 percent.
Those who are new to e-commerce world may have difficulties looking for the right merchant service provider. It is very important to find merchant account provider that will be able to offer affordable rates, as well as the best services.
To get an online merchant account a merchant must meet certain requirements set by the bank or other merchant service provider. Generally, merchant service providers set requirements depending on the size of your business. To be eligible for an online merchant account, your web-based business should not be found in the list for terminated merchant accounts â€“ the MATCH file.
The MATCH file contains information about web-based businesses, which have infringed their merchant account processing responsibilities. If the name of your company has appeared in the MATCH place, you cannot be approved for a merchant account. Thus, you will need to get rid of it by working with the company that has put you on that list.
Merchant account providers may require merchants that have a sales projection of more than 5000 dollars per month provide documents like proof of partnership, tax returns, previous trading statements, checking account statements, as well as nonprofit or limited liability status. Sometimes you may be asked to provide trade references.
Since more risks are associated with online transactions, it is more difficult for online business to get acquire a merchant account. There are three types of risks an online merchant account may face when making online transactions. The first one is credit risk. Merchant service providers take into account as to how much a web-based business might owe them in future. Thus, merchant service providers pay great attention to a business's credit history.
Fraud risk is another type of risk that merchant service providers pay attention to. Merchant account providers want to avoid chargebacks from fraudulent credit card transactions. A bank is required to refund money anytime a customer demands charge on sales. The refund is passed on to the merchant service provider. Thus, it is the merchant that shoulders this loss.
Another type of risk is contingent liability, which includes risks related with unforeseen marketing circumstances. Online businesses providing lifetime service guarantees have a higher risk of contingent liability.
There are a great number of online merchant account providers, as well as various web-hosting plans, which enable you getting free domain registration. Most of merchant service providers can help you find the most appropriate domain registration for your business.