Just What Is A Merchant Account Anyway?

So, you have started a business online. To stay competitive and keep the sales coming in, you wish to offer your customers the option of purchasing with a credit card. But how do you do that? One way is to open a merchant account. Let us take a look at just what a merchant account is.

If you have never heard of a merchant account before, the concept is really quite easy to understand. A special account is created through a banking institution (usually the bank where you do your business or personal banking) or a clearing house (which is similar to a bank, with slight differences) which will permit you to accept payment by credit cards. Any and all credit card transactions will pass through online authorization and ultimately be deposited into your account (once the credit card charge has been approved).

Using a merchant account is really the easiest way to accept credit card payments. There are other ways, but they can cost more and be a much bigger business hassle. When a merchant account is established and a company is willing to authorize payments to your business online, your customers can begin using their credit card numbers for purchases and you will receive payment!

Actually, that is an over simplified explanation of what happens. There are many steps that need to occur before you will see any of the money from credit card payments.

Step 1 – Improve your website so credit card numbers can be accepted.

Step 2 – Verify and approve the charge. This can be done by the institution where you have a merchant account or by an independent online authorization company. If you go with the latter, be sure to do sufficient research. Going with an inexpensive company may save you money up front, but if they approve invalid credit cards you will pay much more!

Step 3 – Charge is authorized, so the details move to the customer’s credit card processor. They debit the card and deposit the money into your merchant account.

There are companies that provide these steps in an “all-in-one package” deal. The choice of how you accept your credit card payments online is up to you, but a great amount of searching for the best and right company is necessary.

Looks easy, does it not? However, setting up a merchant account may be trickier than you think. This is especially true if you are just starting your online business. You may have to wait until your business is established and can show its profitability before a financial institution will give you the desired merchant account.

There are reviews of the best merchant account providers and more helpful advice at http://www.top-merchant-accounts.com/