Setting up a business on the World Wide Web necessitates the setting up of a merchant account to process payments. A merchant account is a special account with a bank or online website that is a member of organizations like Visa or MasterCard. A merchant account provider is a business or website that is authorized to provide merchant account services to online businesses. Setting up of a merchant account will enable your e-commerce site to receive payment online via credit cards for purchase of goods or services.



What happens is:

• A customer to your e-commerce site presents a credit card to make payment for purchase of goods or services.

• This electronic request will immediately go to the “processing network” of the merchant account provider. Here verification of credit card will take place. If funds are available and the credit card is verified the system will send an electronic response to your website. Known as the “authorization” code, this guarantees you funds as payment for goods or services. The authorization code is a six digit number. This transaction will then be stored in the system

• At the end of a business day you must submit a “final request” of the day's business to the merchant account processing network. The processing network will then “settle your batch” or “capture the funds.” The settlement report is systematic and lists payments received by card type “Visa, MasterCard, American Express, Discover etc.” Any errors must be immediately corrected.

• After this the funds will be deposited electronically to your bank account after deduction of the discount rate you have agreed to pay the merchant account provider.

• At the end of thirty days or the month the merchant account provider will send you a consolidated statement listing your activities and the associated fees charged to you.

Setting up a merchant account is not difficult. All you need to do is select a reliable merchant account service online from a website that has done considerable background checks on your behalf.

Merchant account providers charge their customers for the service. The fees are: a discount rate, a transaction fee, and monthly fees.

• A discount rate can range from 2.5-5% depending on your business and other factors.

• The transaction fee is a flat sum of say 30-50 cents a transaction.

• Monthly fees are charged of the service the merchant account provider gives. This is normally decided before signing the merchant account agreement.

In order to set up a merchant account you will need to provide the merchant account provider with details such as:

• Your name and business nomenclature.

• Details of your business checking account.

• A copy of a voided check.

• Articles of incorporation.

• Details of online business.

• A copy of your return policy and business structure.

• References from the trade.

• Tax returns (the latest).

• Copy of driver's license and social security details.

• Details of any e-commerce association memberships.

The relationship between any business and the merchant account provider needs to be based on trust so choose your merchant account provider with care.