Merchant Account Selection is The Most Important Decision for Web Business

There is a boom in on lines sales in US and Canada. Revenues from ecommerce in the US crossed 100 billion in 2005. A successful web business normally requires product catalogs, good content, a shopping cart and mechanism to accept payment. Product catalogs are related to your chosen line of business. If you want to sell cameras, your product catalog will have details of different camera models. You also need to integrate a well designed shopping cart. You should select a good web host company who provides a shopping cart. You may have to pay separately for the shopping cart.

However, most web hosts do not support payment processing. Unlike other ecommerce necessities, payment processing is normally not included with ecommerce web hosting. You may need to use the services of other companies for on line payment handling.

In order to accept credit card payment from your website you need to set up a merchant account with a merchant bank or you can use a third party payment Processor Company like PayPal.

It is advisable that you use a secure dedicated server if you are planning on getting a merchant account and processing the credit cards yourself, as you will have sensitive data like customer credit card details. This is a better option if your transactions are high.

6 important points to consider before opening a merchant account

(1) Banks or merchants always charge an application fee, as there will always be some research done on you as a potential customer. It is preferable to select a merchant who will refund the application fee if your request is rejected.

(2) Normally, banks have a condition of minimum account billing. You should not select a merchant who charges more than USD 25.

(3) Most banks charge a statement fee to cover their administrative costs. If there is a stringent minimum account billing required there should be no statement fee. You should do some home work before finalizing the merchant and never agree to pay more than USD 10 per month.

(4) To promote your product, you need to have a refund policy. In this case there is a possibility that you will be charged back. In most cases, the bank favors the customer and will debit your account for the full amount. You need to understand the charge back policy in detail to protect yourself.

(5) It is necessary to ensure that your merchant should not charge you more than 3 % of the purchase value for each transaction. This means you will pay only USD 3 as transaction fee for the sale of a product of USD 100. Hence you should understand the applicable transaction fee in totality before you finalize any merchant.

(6) Some merchants charge a separate setup fee but you should not pay it if you have already paid an installation or programming fee. There is a considerable amount of work done to create merchant accounts and fees are normally more than USD 100.

Followings are important tips to remember at the time of approaching banks or an intermediary about a merchant account.

You should carefully read the terms, conditions and anticipated charges. You should ask questions to satisfy all your queries. It is important to think and understand properly before you sign on the dotted line.

Some banks require a reserve account if you are just a start up or expect low transactions or you have poor credit rating. You need to understand all conditions regarding a reserve account before signing an agreement.

You should know whether funds will be available to you within 72 hours.

Third party Payment Processor for Small or Start up business

Integration of PayPal or similar services with web hosting is very simple. In this case, there is no involvement from the web host company. This turns out costlier in the long run and you are also putting some other company's name and brand on your credit card. It is necessary to inform your customer what is going to show up on their credit card bills to avoid any confusion.

There are other full service payment solution providers of Credit, Debit, Check Conversion. You may also consider them as an alternative to PayPal.

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