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Credit Card Purchasing Overview
To accept credit card payments, you have to set up a merchant account. It's not a
complicated process, but there are hundreds of companies competing for your business,
so choosing the right one can be difficult.
Merchant account providers charge a "discount rate" — a percentage of each
transaction they handle — as well as a per-transaction fee. They may also
charge application fees, monthly minimums, and many other types of fees. Be sure
to compare the total monthly costs for each supplier you're evaluating.
Additionally, the more risk providers see in your business, the more you'll be charged
for merchant credit card processing. Product sales are considered safer than services;
mail order and phone transactions are riskier than in-person sales.
Applying for merchant account credit card privileges may seem like a hassle, but it's
essential for doing online business. Most e-commerce web sites require customers to make
an online payment for their purchase. These online credit card transactions ensure you
get payment right away. It also allows you to better serve your customers by shipping
items without waiting for payments by mail or checks to clear.
However, you don't need a merchant account to accept Internet payments through your web
site. Certain web sites, like eBay's PayPal service, accept an electronic payment on your behalf,
process it, and take a percentage of the payment before sending the balance to your account.
This is usually a solution for small businesses or personal transactions, but it can bridge
the gap while you wait for credit card processors to grant you an account.
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