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Online Merchant Accounts: Why Your Business Needs One

Online Merchant Accounts: Why Your Business Needs One

One of the easiest and most common ways to shop online is to use a credit or debit card, and customers expect this option when they want to make a purchase on your website. In order to accept and process these transactions, you’ll need an Internet merchant account. Even if you already have a brick-and-mortar store where you process credit card transactions made in person through a traditional merchant account, the same merchant account cannot be used for online credit transactions, because the regulations governing internet transactions are very different, and trying to process online credit orders using a standard retail merchant account is likely to get your account terminated. Also, if you process card-not-present transactions on your card-present (retail) merchant account, you’ll end up paying higher discount rates than if you got properly setup for an internet merchant account. Whether your company is based entirely on e-commerce or your online store simply augments your brick-and-mortar business, you need an Internet merchant account to process your online credit transactions.

The reason for the additional regulations with online merchant accounts is that sending credit card information over the Internet is inherently risky, and as such merchants (or their processing companies) are required to conform to much more stringent standards to maintain network security, control access to systems holding card information, and protect cardholder data. This is one reason why it’s important to choose your processing company carefully, but it’s not the only factor to consider.

From the perspective of the credit card processing company, Internet merchant accounts represent a significant gamble. Because you never interact with the customer face-to-face – you can’t check a signature or an ID, or even see them holding the physical card – the risk of fraud or other causes of chargebacks is much greater when doing business online. Because the online merchant account provider is responsible for all transactions in the event of fraud or other chargebacks, they charge higher rates for an Internet merchant account than they would for a comparable standard merchant account, to buffer themselves against the greater financial liability the online merchant account represents.

Not all Internet merchant account providers are created equal, so it’s important to choose your processing company with care. The industry is extremely competitive, and some providers fail to disclose all of the fees associated with their merchant accounts, or don’t measure up in terms of service and support.

Many companies will quote a “standard” discount rate in response to initial inquiries, but that rate is usually based on the most optimistic possible set of circumstances. Look for a provider that is honest about the rates your account will typically be charged, and is upfront about all fees associated with your account. Be wary of processing companies that require long contracts; the service the company offers should be good enough to keep your business without trapping you in a lengthy contract.

Find out about the provider’s reputation for service and support as well. Any technology-based industry will suffer its share of glitches; are they good at getting service back up quickly, and preventing interruptions? Do they have 24-hour customer support? Can they provide different services if your business expands? Make sure you have satisfying answers before signing up for your online merchant account.

Durango Merchant Services has been providing internet merchant accounts since 1999, and has experience with thousands of web businesses across the country and internationally. When setting up an internet merchant account, choose someone like Durango Merchant Services that has the expertise, experience, and know how to set you up with the correct merchant account and gateway system for your business.

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