Credit card payment system provides both merchant and customer a convenient way of doing online transactions, and businesses that accept credit card payments tend to make more sales. Credit cards encourage consumers to make a purchase even if they don’t have the money to pay for it. In order to be able to accept credit card payments, you must first set up a merchant account.

Merchant Account - What Is It?

Merchant account is a special bank account that allows businesses to accept online payments via credit cards, debit card, or e-check. It automatically validates a customer’s card details, including available funds, before processing the payment. Once the transaction is completed, payment is sent to your business account.

Steps for Setting up a Merchant Account

Setting up a merchant account is a three-fold process. Each step requires some decisions that will determine what type of customer payments you want to accept and how fast you want the funds in your account.

Choose a bank or financial service

Major credit card providers are American Express, Discover, VISA, and Mastercard. American Express and Discover are independent entities, so you can apply directly from them. VISA and Mastercard, on the other hand, have distributors. These distributors are the banks.

Most banks offer merchant account services, so finding one should be easy. If you have an existing savings, checking, or loan account, you can start with your bank. Consider checking other local banks, too, to compare fees.

As a merchant account is considered a type of loan, your application may be rejected by banks. The reason is that while you get funds deposited into your account within a few days after a customer charged their purchase, the bank has to wait for up to 30 days before receiving the payment from the customer. If such is the case, consider taking your application to an independent sales organization (ISO) or online merchant services such as PayPal.

Choose the type of payments

When applying for a merchant account with a bank, indicate what payment forms you want to accept. In addition to credit cards, there are other non-cash payment options. These are debit cards, e-check, gift cards, and smart cards.

Select your merchant account technology.

There are a number of technologies available for processing credit card payments online. These are PCs, hardwired terminals, and mobile devices.

The steps for setting up a merchant account are few and simple. However, it may take months before you get your application approved by the bank or other financial institution. The sooner you apply, the sooner you may start doing credit card transactions online.

Sources:

• en.wikipedia.org/wiki/Merchant_account
• https://www.paypal.com/cgi-bin/webscr?cmd=_payflow-about-ima-outside