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Need an Online Merchant Account? Open Your Wallet

A shopping cart merchant account can be an expensive part of your overall shopping cart software solution. If you're setting up a shopping cart merchant account, shop around a lot to see where you get the best combination of fees and services. You can expect to pay the following:
* Set-up fee: Sometimes these run into hudreds of dollars, but many shopping cart merchant account providers will waive the fee.
* Monthly fee: Expect to pay about $25 monthly to your shopping cart merchant account provider.
* Percentage of each sale: Expect to pay 2 to 4 percent of each sale to your shopping cart merchant account provider.
* Fixed fee per sale: Usually 20 or 30 cents from each sale goes to your shopping cart merchant account provider.
* Termination fee: If you try to cancel before the end of a contract, your shopping cart merchant account provider will charge an extra fee, which can run into hundreds of dollars.

Credit cards and your internet merchant account

Taking credit cards makes your internet store appear professional and inspires confidence. It also means you can collect money from international customers as easily as those in your home town. For your small business merchant accounts to work with your internet store, you will need a "card not present" merchant account, which offers extra security to make sure you can collect your money. You want to make it as easy as possible for people to buy from you, quickly and easily. If the process is too complicated or if people think they'll wait too long by mailing you a check, you will have lost the sale. You will most likely make up for the transaction fees by making more sales, as your online merchant account lets you quickly process your customers credit cards and fulfill the order rapidly.

If I take credit card payments online, can I take them in person as well?

Yes. Most merchant accounts have a means of entering credit card information manually so you can process in-person or telephone orders in addition to online orders. Your internet merchant account might also an option to let you process orders over the telephone and include the options of recurring payments, in case you are selling something for a monthly fee.

Discount rates and your merchant account

Merchant accounts typically charge a discount rate, a percentage of the selling price. That's how they make their money. Remember to price your goods accordingly, as you will only be collecting the sale price less the discount rate. You want to shop around and find an internet merchant account with the lowest discount rate, so each sale will cost you less money. An online merchant account has a higher risk of fraudulent credit card use so will typically charge a higher discount rate to cover their risk.

If I already have a merchant account for my store, why do I need an internet merchant account?

In your store, you can swipe the credit card through a card reader, compare a customer's signature to that on the back of the card, and with newer cards even see a picture of your customer. All this helps eliminate fraudulent use of credit cards. For an ecommerce merchant account, additional steps are taken to ensure that the card is not stolen and this special type of account is called a "card not present" merchant account. This might include comparing billing and shipping addresses or having the customer enter the security code on the back of the card. Your internet merchant account helps ensure that you will collect the payment, as promised, and not be out both your goods and the money. Processing is done in real time, as the order is being made, so you don't have to wait and batch process payments.

Understanding your merchant account

Merchant accounts are basically bank accounts that allow you to accept credit card payments. You can set up a merchant account on your own or as part of your shopping cart software. If you don't want to accept credit cards online, you can ask people to pay by check or something like PayPal. If you do set up an online merchant account, you'll typically pay a fee per transaction and a percentage of the amount charged. Some merchant accounts charge you a monthly fee even if you have no sales that month so make sure you understand the details of your internet merchant account before you commit to paying more than you can afford.

"Card not present" merchant account

In a brick-and-mortar type store, you present your card to the cashier, who swipes it through a card reader or takes an impression of it. With an ecommerce merchant account, you cannot physically see the card you are charging, so you need a special kind of merchant account called a "card not present" account. An internet merchant account will typically ask the customer to know the billing address and/or the security code on the card. This helps prevent fraudulent use of credit cards online.

Costs Vary Depending on Your Needs

The cost of an integrated online sales solution, combining a shopping cart-based purchasing package with online sales support and CRM software, can vary widely depending on what exactly you want the software to do. But expect to pay at least a few hundred dollars per month for an integrated online solution and even more for a custom, locally hosted solution (unless you're a software expert who can build it yourself). Make sure to decide exactly what sales tools you need to have -- vs. like to have -- before you go out shopping. It can get expensive and you want every dollar your spend to count.

You're an Online Merchant; You Need a Merchant Account

A shopping cart merchant account is a necessary, but often little-understood part of your shopping cart software solution. A shopping cart merchant account connects to your shopping cart software, your payment gateway and your regular business bank account. You must have a shopping cart merchant account to take conduct ecommerce on the Web using credit cards.

Watch Out for Hidden Fees

Here's a list of potentially troublesome fees for you to check with your shopping cart merchant account provider. If your shopping cart merchant account provider charges any of these fees, it might be time to look elsewhere:
* Chargeback fees
* Retrieval fees
* Termination fees
* Gateway fees
* Per Item fees
* Hidden setup charges
* Non-refundable setup charges
* Batch fees
* Cancellation fees
* Minimum fees
* Pass through fees (these vary)
* Over limit fees
* Voice Authorization fees
* Non-Sufficient Funds fees
* Bank Setup fees
* Daily Close-out fees

Ebusiness solution and credit card payments

Merchant accounts are what allow you to accept credit card payments. You'll also need a payment gateway to process the transaction. Sometimes an ebusiness solution will include a merchant account and/or a payment gateway with their service and other times you'll need to sign up for these separately. You may pay a charge for each transaction or a minimum fee rather than a percentage if your items are low-cost. Setting up a merchant account on your own may come with a large monthly service fee. This could be worthwhile if your income is high enough, but if you don't expect high sales in the beginning you may want to avoid signing up for a merchant account on your own and find an ebusiness solution that handles that for you.

Make Sure Your Provider Offers a Truly Complete Sales Solution

Developing an online sales solution can be daunting, especially for newcomers. So many prospective Internet merchants turn to well-known e-commerce providers who offer turnkey online sales solutions for one monthly price. But before you settle on Yahoo or Ebay to provide your online sales solution, make sure that your prospective provider can give you everything you need:

* An e-commerce shopping cart, a merchant account and credit card processing are all required from any turnkey sales solution provider.

* How about an integrated affiliate program, which will allow others to do the selling for you? Someday you might even want to develop a public API for your site to allow affiliates to integrate directly with your ecommerce system.

* How about autoresponders, which can automate routine email responses to clients, and prospective clients? Autoresponders can even deliver electronic coupons.

* Think about a secure digital delivery system, which will allow you to sell digital content direct from your site.

So as you can see, a complete online sales solution is more than a shopping cart. Look around and make sure that any provider offering complete turnkey services can live up to its promises.

Here's a Sales Idea: You Become a Supplier

Here's an interesting idea for an online sales solution: How about if instead of having affiliates work for you selling your products, you make yourself an affiliate of a larger site and sell your products through the larger web site? It's an idea that's being used by online sales solution provider 2CO, among others. With these companies, you become, in effect, a supplier to the larger site. For example, if you're selling pens, you advertise your pens on the 2CO site. When someone wants to buy a pen, they pay 2CO, which then pays you. A big advantage here is ease of use and upfront costs. You don't pay for anything until you make a sale. Will it work for you? It depends on what you want to sell and how much work and money you want to put into selling it. But if you want an easy set up, with no initial costs, it might be worth checking out.

EBay Works for Millions Every Day

Anyone looking for a complete online sales solution can't ignore EBay. Millions of people buy and sell on EBay every day. There are more millions of browsers -- even better, browsers actually seeking out niche products. And EBay, together with its merchant account provider brothers at PayPal, make it extremely easy to set up a turnkey solution. One disadvantage: You can't really create your own web identity with EBay, since you need to use their pre-determined designs. But if you are a beginning, or casual, online merchant, EBay is one of the easiest online sales solutions out there.

Why Go With a Local Solution? Customization and Cost

With hosted online sales solutions so complete and so popular, why would anyone choose to develop their own, locally hosted sales solution. Easy answer: More freedom to customize. A locally hosted solution is the only way to get full control over the design and integration of your shopping cart. Also, if you have a very busy, industrial strength store, it might be less expensive to run your own shopping cart and sales solutions, which you can adjust to your own specific needs.