Once your business is ready to make sales online, an online merchant account allows you to accept credit card payments over the Internet.

What is an Internet merchant account?

The process involved in accepting online payments is complex, starting with having shopping cart software and a payment gateway set up, and requiring a merchant account to process credit card payments. Though you can use PayPal to accept payments, not every customer has or wants a PayPal account, which is primarily used to make payments from a bank account rather than a credit card.

An Internet merchant account is a special bank account designed to accept credit card payments over the Internet. Though some big banks offer Internet banking accounts, you will probably have to find one through an online bank that specializes in Internet merchant accounts or through your eCommerce web hosting provider.

Once you have an online merchant account, the account provider should send you software and instructions on how to integrate your merchant account into your web site.

How do I get an Internet merchant account?

If your local bank doesn't offer Internet merchant accounts you can shop around online, or look for an eCommerce web host that has a partnership with an online bank that offers them to its customers, such as Yahoo!

As with any bank account, an Internet merchant account will require you to turn in an application. Most merchant account applications can be filled out online, and some then follow up with paperwork sent through the mail or by fax.

Internet merchant account providers like merchantexpress.com and charge.com provide a fairly fast application process and accept most customers, even if they don't have a great credit history. These companies also process applications for free, though they do charge a high early termination fee if you back out of your account with them.

Because Internet merchant accounts are bank accounts with legally binding procedures and contracts, always be truthful on your application and read all of the terms and conditions carefully before agreeing to them. If there is anything you don't understand, have it clarified before moving on in the process.

What does an Internet merchant account cost?

When doing a merchant account comparison you find they may charge several types of fees. Not every account will charge every type of fee, but they can charge several fees, even on the same transaction, so make sure you understand all of the fees they charge before you open your account. Some examples of fees that can be charged are:

• An application fee, to cover the costs of processing an application.
• A monthly or yearly fee for having the account open.
• A fee for every transaction they process.
• A discount rate, which is a percentage of each transaction they process.
• Fees for various other things like having an inactive account or providing refunds.
• An early termination fee if you close your account with them before a set amount of time has passed, usually one to three years. Early termination fees can cost you several hundred dollars, so know what these fees are before setting up an Internet merchant account.
• Some Internet merchant accounts also charge an extra setup fee for accepting credit cards other than Visa and MasterCard, such as Discover or American Express, so you will have to decide which cards you want to accept as you shop for an Internet merchant account.

Once you estimate what your expected sales will be and what the fees from an Internet merchant account will cost you, you can look for an account that best meets your business's needs.

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