Getting a Merchant Account – Tips For Beginners
An e-commerce web hosting merchant account enables your online business to accept credit card payments. A merchant account provider transfers payments made from your online business transactions into your bank account, with a small percentage taken off for every sale.A merchant-account is a must for e-commerce web hosting users because it allows their customers to pay through credit cards. It can also be used alongside payment gateways and shopping cart as well. Moreover, a merchant account is useful in transactions both by telephone or face to face. In e-commerce web hosting, a merchant-account serves as the third party between the credit card processors and the website. It can be used for purchases manually submitted by the website owner or entered by the customer. Simply put, a merchant account is the reason why you get paid for every sale you make.
Accepting credit cards online is important because consumers tend to spend more using their credit card than other modes of payment. In fact, the use of credit cards for online transactions has been proven to increase profitability by as high as 52%.
Those who are new to e-commerce web hosting may be swayed by several merchant accounts claiming to be the best but actually aren’t. If you are looking to get an e-commerce web hosting merchant account, make sure to look out for ridiculously high transaction fees and hidden charges.
There are some e-commerce web hosting providers offering cheap merchant accounts but slap with you fees. It makes sense to get a plan for your e-commerce web hosting needs especially if you are doing heavy business a month. You might want to go with a plan that has a higher cost per month but with a lower transaction fee.
To get a merchant-account, the business owner should meet certain requirements set by the bank. Merchant account providers set certain requirements depending on the size of your business. For one, your online business should not have appeared on the MATCH file, which is the file list for terminated merchant accounts.
Similar to a credit-investigation institution, the MATCH file contains information about online businesses that have flunked in handling their merchant account processing responsibilities properly. If your name appears in the MATCH place, you must get rid of it by working with the company that put you on the MATCH list. Otherwise, you cannot be approved for a merchant-account.
For online businesses that have a sales projection of more than $5000 a month, merchant-account providers may require you to provide documents such as tax returns; proof of partnership, corporation, nonprofit or limited liability status; checking account statements or previous trading statements. Trade references may also be required from you as well.
Compared to a physical business, it is more difficult for an online business to get acquire a merchant-account because there are more risks involved as regards to transactions made through the Internet. There are three kinds of risks that online businesses present when getting a merchant account, one of which is credit risk. Merchant-account providers look carefully as to how much an online business might owe them in future time. For instance, the credit risk is relatively low for a new business that incurs monthly charges of $5000. Simply put, a business’s credit history is a primary factor in the merchant account provider’s decision-making process. best high risk merchant account
Another type of risk that merchant-account providers put the biggest concern is fraud risk. As much as possible, merchant account providers want to make sure that they incur very little chargebacks from fraudulent credit card transactions. This is because if a customer demands a charge on the sale, the bank is required to refund the money. The refund is passed on to the merchant account provider. Finally, it is the merchant that shoulders this loss. Newer online businesses are said to be at a higher fraud risk.
Contingent liability is another type of risk that not only includes fraud risks but other risks related with unforeseen marketing circumstances. Businesses offering lifetime service guarantees have a higher risk of contingent liability because the merchant account provider can be passed on the liability should the business close