Setting Up an Internet Merchant Account

Allowing people to buy from your shop online is becoming ever more important in the retail market. More people are putting their trust into online stores as is shown by the monumental increase of spending activity over the net during the past couple of years. With this in mind it has never been a better time to start selling online, whether you are a new business or an established bricks and mortar one. The first step you should take is setting up your web site which should include your full terms and conditions as this will be scrutinised by the banks when you apply for merchant services.

Once you have completed your web site the next step is to apply for a Merchant Account, also known as Internet Merchant Account or Ecommerce Account, which allows you to accept card payments. This is extremely important as consumers are used to purchasing online using either a debit or credit card and without this facility you are restricting the ways in which customers can purchase goods or services from your site.

When setting up a merchant account it is a very good idea to shop around and the rule of thumb is to not take the first option you find (unless of course it’s outstanding!). When approaching banks make sure that they provide you with all the information you require. Ideally you should be prepared with questions to find out the following:-

• The charge each month for issuing statements on all your transactions
• The cost for processing your application (yes unfortunately there is one)
• The kind of discount rate they are willing to give. This is normally a percentage deducted from each sale
• The transaction rate which is normally added to the discount rate and is a flat rate on each transaction
• The monthly minimum charge which is made regardless of the level of sales each month
• The cost of chargeback’s which is the fee incurred per fraudulent transaction.
• Any other additional charges of which you should be made aware

In addition it is important you make sure your chosen bank has the capacity to serve you. Some banks may give the impression that they can provide everything you need creating a false sense of comfort since some smaller local banks tend to outsource their customers merchant accounts to third parties for a commission. You can save time and money by going directly to a national high street bank that can provide all the necessary services within its corporate group structure or indeed contact Seymour Direct who probably can offer the lowest running costs for a merchant account in the UK.

If you fail in your attempt at setting up an internet merchant account or even if you do not want the hassle of setting one up then there is no need to worry. You can use a third party processing service such as PayPal, 2Checkout, or ClickBank. These payment processes normally charge a percentage fee for each online sale that is made plus charge a transaction fee for receiving money (i.e. a percentage of the amount sent plus an additional fixed amount). The benefits of using these services are that they are easier to set up, offer fast payments but can work out very expensive if your sales from your web site increase. However they can provide a means to an end whilst tweaking your site and are an ideal option for smaller businesses.

For larger businesses it is recommended that you obtain an internet merchant account. It offers better flexibility for your customers allowing them a variety of card payment options whilst at the same time making your site more professional and trustworthy whilst keeping your costs per sale lower.

It can be a long and even expensive process preparing to sell online not to mention the ongoing costs when you are finally up and running. However your exposure on the internet can significantly boost your sales and thus increase your bottom line.