Maybe you’re a brick-and-mortar store looking to expand your customer base to people who can’t reach your physical location, or maybe you’re a unique small business that only sells products online. Whatever your situation, having an online business presence is just good sense. Still, whether you’re just getting up and running as a business or are trying to expand your brick-and-mortar sales by offering products online, there are a lot of things to keep track of. There are strategic and operational things to consider when you’re launching a new e-commerce business, and one of the most important considerations is your payments operation.
So what exactly is a merchant account? Essentially, it’s what allows you to accept payments online. A merchant account is a special type of business bank account that lets your business accept different types of payment—typically debit and credit card payments — necessary for online purchases. Every time someone pays for something with a credit card, funds are transferred to a merchant account that a merchant holds with a bank. The merchant is responsible for all the transactions on their account, and every bank has its terms of service.
So you know you need a merchant account — that’s a given. It’s time to go shopping for a provider. You’ll want to have an idea of what kind of services you want your merchant account to provide. What kind of credit cards and currency do you want to accept? How will the payment gateway (a service that authorizes credit card payments, usually set up with the merchant account) be integrated? What sort of authorization process does the provider have? What kind of customer service is available? Finally, you don’t want to skimp on security: make sure the merchant account provider is PCI DSS Compliant, which means they meet certain requirements like protecting cardholder data and regularly updating antivirus software. Depending on the type of business you have, you might also want to look into extra security and fraud monitoring tools. Once you’ve found a merchant account provider that fits your needs, you can begin the application process.
It’s good to have an understanding of what might cause your application to be flagged. These reasons don’t mean you’ll be denied outright, but if you answer “yes” to any of these questions, it’s worth doing a bit of extra research and go the extra mile to ensure your application will be approved. You might also have to pay extra fees or agree to special restrictions.
Once you decide on an account, you’ll send a cover letter that answers any potential questions or concerns. Elaborate on any steps that you’ve taken to mitigate risk, be straightforward and honest about potential issues, and spotlight any important experience or qualities that make you stand out from your competitors.
Finally, a word of warning: do your homework before applying for an ecommerce merchant account and choose a reputable provider. Be wary of “free” e-commerce merchant accounts or those that offer cash back if you find another deal. Make sure you protect your financial information, read all the fine print, and research everything carefully.