What a merchant account does NOT do

By Kevin Hagen

Having a merchant account is essential if you want to accept credit card payments for your business. But a merchant account may not be everything you need. Some merchant accounts may offer a "turnkey" solution, providing you with everything you need. With other merchant accounts, you may have to contract out for certain elements of the overall credit card billing and payment process. This can include things like a security system to protect your customer data, shopping cart software and a payment gateway to enable you to accept payments.

Selling online
If you are selling online, you will need to create a form on your Web site where credit card information can be entered. To keep that information safe, you need to set up your site using encryption technology. You also need to get a digital "certificate" to let your customers know that your site is secure. This service may be included in your merchant account, or you may need to do this separately through your Internet service provider.

If you are using a shopping cart system on your Web site, you need special software that is compatible with a payment gateway such as Authorize.net or Verisign, according to Advanced Merchant Services. Merchant account companies work with different payment gateways, so it's important to know which one yours uses so that you get the right shopping cart software.

From your shopping cart system, the customer's payment goes to the payment gateway. The gateway routes the information through the financial networks and, if everything goes well, the customer's credit card account is charged and your merchant account is credited, according to Taming the Beast. Your merchant account company may provide that gateway as part of your service, but you need to be sure it does before you set up shop online.

Different types of merchant accounts
What your merchant account does and doesn't do depends on what type of account you have. You need a merchant account that is geared to the way you run your business. A retail account is for bricks-and-mortar businesses where a physical credit card is presented at time of sale. If you do business by catalog, you probably need a mail order/telephone order (MOTO) account. And if your Web site is your storefront, you need an Internet merchant account. If you do business in a variety of ways, you will need a merchant account that provides all these services.

Most merchant accounts will enable you to accept all credit card payments. But this is not always the case. For example, a merchant account may be designed to accept Visa and MasterCard, and you want to be able to accept whatever card your customers use such as American Express or Discover. You may have to specify that on your application for the merchant account.

Not all merchant accounts are equal
Different merchant accounts may provide different levels of customer service. Before setting up a merchant account, you should be clear on exactly what you are getting. For example, not all merchant account companies provide online service 24/7.

By asking questions before you sign up for a merchant account, you can ensure that you have all the bases covered and are getting the service you need.

Article by Kevin Hagen

Published: December 16, 2009