Merchant Accounts - Small Business Options for Accepting Credit Card Payments Online

Once you have taken the step to establish a small business, you will need to provide methods of payment for your customers to buy your products or services. While traditional methods of payment included cash or checks, the internet has made it possible for consumers to make purchases with the click of a mouse using their credit card.

The Importance of Accepting Credit Card Payments
This opportunity has allowed businesses to change the way that they accept payments in order to make it easier for customers to buy.  Web savvy consumers pretty much expect any business to be able to handle credit card purchases online.  Not offering the ability to pay with a credit card can make or break a valuable sale.

Evaluating Merchant Accounts
Creating the opportunity for consumers to purchase your products and services with the use of a credit card is an important step for most businesses to take, but it involves several choices and considerations when creating it. With multiple options available for accepting payments, it is important to understand each option’s features and benefits prior to establishing your preferred payment method.

Merchant Account Features
Merchant accounts are the most common type of credit card acceptance method used by both small and large businesses around the world. Merchant accounts are specifically designed bank accounts that allow a business to accept and transfer credit card funds through a designated network. Credit card transactions can be completed exclusively online, through a manual credit card processing terminal, or through a shopping cart feature on the company’s website.

There are several reasons why a business would want to establish a credit card processing system or a merchant account, including:

• Elimination of bad checks written by customers and the hassles and fees associated with this problem.
• Credit cards offer a quick payment option for vendors, customers and clients both online and offline.
• These payment options offer easy transfer options directly into the business’s primary banking account.
• Credit processing systems and merchant accounts often offer a consolidated reporting option, allowing for a more simplified accounting system for checks and balances within a company.
• When making the decision to add this type of payment option to a business structure, the fees and the services offered are primary considerations.

Merchant Account Fees
Merchant accounts companies often charge 3 separate fees to establish a relationship: an upfront fee for the equipment if is needed, a monthly fee and a per transaction fee, ranging from 1.5%-4% depending on the company and the type of credit card used by the consumer. When you are ready to establish a merchant account, you will be required to submit an application and they will run either your personal credit or your business credit to establish a lease for their provided equipment.

Paying the Fees
Once you have established a relationship, the merchant account company will link to your business bank account to deposit money as your payments are collected from customers. The merchant company’s fees will be automatically deducted from the consumer’s credit card payments and you will receive a monthly statement showing all of your business’s account activity.

Opening a Merchant Account
If you want to open a merchant account, talk with your local bank, look online and ask other business owners for referrals in order to generate a comparison list of companies, their fees and their service options.  For small businesses just starting out the cost of a merchant account might not make financial sense.  The good news is there are options other than a merchant account that allow small businesses to accept payment.

Merchant Account Alternatives
In addition to merchant accounts, businesses also have the opportunity to leverage 3rd party payment processing companies such as Paypal or Presto Sell.  These are perfect for entrepreneurs that don’t have established enough transaction patterns to make a merchant account affordable.

Presto Sell
Presto Sell is one of the least expensive online shopping cart like features leveraged by small businesses. It is easy to install, reasonably priced and offers an immediate opportunity for an online credit card shopping cart feature. One of the most common challenges to small businesses when it relates to online shopping cart features to offer their products and services is the overall cost; shopping cart website features are traditionally very expensive.

Presto Sell and companies like them offer an inexpensive web addition option to make this transition smooth and affordable. They charge a monthly fee for their service and a nominal transaction charge. This system allows for customers to make purchases online, but does not allow the business the flexibility to manually swipe and accept credit cards over the phone or in the business location.

PayPal
Paypal is one of the most common online payment systems since it is easy to set up and universally used around the world. Paypal also charges a per transaction fee for their payment processing systems, but they don’t require the up front fees that merchant account companies charge and there is no processing equipment required.

One of the challenges of using Paypal as a primary credit card payment acceptance tool is that it requires to customer to enter in their information online, eliminating the opportunity for the company to take phone or manual credit card orders.

Accepting Payments Online
Merchant accounts, shopping cart features and Paypal accounts are just a few of the primary payment processing options that are available to assist a business in developing a strong business payment model. The fees are a big consideration and the decision to pay them will depend on the type of business you own, the volume of credit card transactions per month, the need to have equipment in your business location to accept credit cards and your overall budget.