Setting Up Merchant Accounts for Credit Card Processing

You want to accept plastic. You know that half of all purchases and 85 percent of online transactions are made with credit cards. So how do you do it? You get a merchant account.

A merchant account serves one role: to accept credit card payments. But how does it all work and how do you get one? Together with the other links in the credit card processing chain, such as payment gateways and credit card terminals, merchant accounts play a key role in the commercial cycle. Unfortunately, getting a merchant account for your business can be tricky, as can handling all of the myriad details in setting up the whole process.

If your company has a track record of reliable sales, you should be able to get a merchant account from your personal bank. Without a sales history, however, your business will probably need to work with a reseller, usually an independent sales organization. ISOs serve as a middle layer between you and their acquiring bank, taking on the risk of doing business with you and adding a commensurate surcharge to your transactions.

Businesses looking to accept credit cards online have to check out one additional aspect of their merchant bank or ISO: How much of the integration with the payment gateway can your account provider handle? If you’re not technically savvy and you shop for a gateway solution separately from your merchant account, look for integrated e-commerce packages that offer prescripted pages that interact with your gateway. This can include secured forms and confirmation pages, as well as other helpful applications such as shopping carts and catalog software for more of a full-cycle solution.

Frank Ross, of Common Sense eCommerce, who owns and owns and operates several product-based e-commerce Web sites says, “The easiest approach is to go through a reseller who can package the merchant account with the payment gateway and handle all the setup details for you. Often these can be coordinated and set up by your business bank contact as well.”

Whether you've got an online business, take telephone orders, or accept credit cards in multiple ways, the biggest determinant will be your credit record and the risk factors in your business. Acceptance rates with ISOs average around 99 percent, so your chances of finding one are good.

When it comes to searching for an ISO or merchant bank, a bid request tool such as the one at BuyerZone.com takes a lot of the headache out of going through scores of providers to find the right service for your business. Your requirements are sent to qualified merchant services providers, who respond with bids for your account.

Once you have your account and equipment you will be technically ready to begin handling credit cards. However, you’ll need to do a little training first, just to get an understanding of the processes involved.

You should read up on batch processing: At the end of the day you “close out” your credit card terminal by sending the day’s transactions to the acquiring bank, at which point your money is transferred from your merchant account to your checking account. That has to be the best part of the day; it is good to know how it works.

For online retailers, however, after you've gotten your merchant account, you still have a bit of work ahead. You will need to incorporate the ability to transact within your site. This means installing your shopping software and hooking it to your payment gateway.

If you have technical expertise or work with someone who does, it should be fairly easy to talk to someone in your merchant account provider’s tech support and have this integrated quickly and directly. If you're not as tech-savvy, you've probably opted for an integrated e-commerce package and don't have a lot of complex setup to handle at this stage.

Whether you have an online business, a card-present company, or something in between, you should have plenty of documentation to study. This will be your key to understanding how your new merchant account works, as well as the other steps of the transaction cycle. In no time, you’ll be ready to accept all the riches your happy customers have to offer.