Do you have a bank account? Most people do. It is where you keep your money instead of a mattress. For business owners, certain accounts are designed to hold the revenue that you generate from credit card sales.
There is no shortage of people looking for ways to defraud others. The credit card industry recognizes that and requires merchant accounts for any business that processes credit cards. It can be offline or online. Through a physical store, credit cards are run through a machine and manually processed. For the purpose of this article, we will be dealing with merchant accounts for eCommerce businesses.
With eCommerce, any merchant that accepts credit cards uses the services of a payment gateway to facilitate their transactions. They are handled automatically through this service account and each transaction logged.
A merchant account is not like your typical savings or checking account. The account is just used for credit card payments. There are options for choosing a merchant account. Choose according to fee schedules and additional services provided to you for using their bank.
Internet businesses have another account that they have to use called an Internet merchant account. This is an account that is set up to temporarily hold funds from credit card transactions. On a schedule that you agree upon, the money is then transferred from this account to your merchant bank account.
You probably already guessed but there is a trail of fees along the way that you are subject to pay. For one, there are fees for holding a merchant bank account just like any other account. You will have one time fees and monthly maintenance fees. For each transaction that they process, there is a per transaction fee. With the addition of the Internet merchant account for eCommerce, fees apply there.
The payment gateway service account is also subject to fees. To subscribe you will have one time fees and monthly maintenance fees. The gateway will also set transaction fees.
When choosing any of these services for your eCommerce business, be prudent. Do your homework and don’t be afraid to ask questions. Fee schedules need to be clearly listed and broken down by the banks and service providers so that you know exactly what you are paying and if it is worth it. Any financial institution that withholds this information could be hiding something and you may want to pass on them.
There is a cost to doing business online and offline. Know where your money is going and be able to track all your transactions through reliable merchant accounts and payment gateway services.