An account at any financial institution that permits acceptance of credit cards and transfers the amount directly to the bank account of your choice is called a Merchant Account. Credit cards are accepted through PC processing software, credit card terminal, through telephone or Internet virtual terminal.
There are plenty of institutions that work with the software, Internet option or any terminal of your choice. Though this sounds easy there could be a few problems like processing companies that are below the standard, overcharges, frozen funds, middleman surcharges. The right choice of merchant services can eliminate these problems to a certain extent. Application gee will be charged for almost all Merchant accounts and in case there is no fee charged, probably the difference will be compensated with sale of equipment or software or charging for transactions.
The transaction process though a bit complicated, takes only a few seconds. For processing a credit card transaction through Internet, the customer chooses the products from a Merchant's website and then checks out with the items. He then opts to pay through credit card. The browser connects to the host's server and provides the payment form. The credit card information is entered by the customer on the payment form that is totally confidential, and gives authorization to the transaction process by clicking on ?complete order? button. The information is transferred to the secure server of the host through SSL encryption. Now the secure host server connects to the processing bank of the Merchant through a third party like Secure Payment Gateway who connects the processing bank through landline. This can also be done directly because some processors have their own secure payment gateway and do not need the service of a third party.
The processor cross verifies the validity of the card and its network like Master Card or Visa and confirmation of the fund availability. In case the transaction is approved, the processor is given a code for authorization or the code is given to Secure Payment Gateway by the processor. The Payment Gateway then converts the authorization into an encryption and transmits to the Merchant web server that then completes the order, The web server of the Merchant sends a confirmation to the customer's browser. The due amount is then transferred from the bank of cardholder to the processing bank of the Merchant. The Merchant's bank can then transfer the money to the local bank of the merchant within the next three days.
Don't make the mistake of assuming that this service is included in your Internet merchant account with a bank. It is a separate? But necessary? Service. ?The merchants think the fee is part of the bank fee, but these process is separate from the banks.?
Accepting credit card payments through your web site actually requires multiple components. Between a paying customer and your bank account, three layers exist:
Payment Gateway - This is the code that will transmit a customer's order to and from an Internet merchant account provider. The payment gateway provides you the ability to accept customer billing information (credit card number, credit card type, expiration date, and payment amount) and the necessary validation steps that must be followed before the credit card is actually billed.
Internet Merchant Account - A Merchant Account is an account with a financial institution or bank, which enables you to accept credit card payments from your clients. The payment gateway actually transmits the billing information to the Internet merchant account provider. Unfortunately, most local banks do not provide Internet merchant account capability.The main reason why most local financial institutions or banks do not want to provide online merchant accounts is because transactions conducted over the Internet are totally different from face to face transactions where a signature is required to authorize the purchase. This makes online transactions prone to credit card fraud. Fraud protection should be one of your primary considerations when choosing an Internet merchant account provider.
Web Site - Regardless of which merchant provider and gateway service you choose, your web site will need to integrate with your service providers. Most providers include detailed web integration instructions. The ability to accept credit cards is essential to site success.
But setting up a traditional merchant account with Master Card, Visa, Discover and other plastic payment methods is pricey. There are set up fees, maintenance fees, gateway fees, and a percentage of each sale goes to the merchant account provider. This is typically too much for the small site owner to absorb.
Both Jim Glu & Mike Ashley are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jim Glu has sinced written about articles on various topics from Debts Loans, Credit Cards and Eyelid Surgery. Jim is a leading writer for the , and w. Jim Glu's top article generates over 27100 views. to your Favourites.
Mike Ashley has sinced written about articles on various topics from Financial Planning, Finances and Credit Cards. Get the insiders secrets of successful application at. Mike Ashley's top article generates over 14800 views. to your Favourites.