How to Accept Credit Cards with an Online High Risk Merchant Account

Regardless of the size of your business, your goal must be to increase annual sales revenue. For this, you must give your customers more alternative mode of payments. It includes credit card payment, debit card payment, net banking and others.

A Study to know

According to studies, business accepting credit card payment is likely to generate more revenue as compared to others. The main purpose of you being in the industry is to earn profit and credit card is a great mode of payment. So, it is better to get a reliable credit card processing before starting off.

There are many third-party service providers with payment solutions for credit card processing like PayPal, but it comes with shortcomings. But special measures must be taken to provide a secure environment to conduct transactions. Else customers will either drift away or will not come back for another sale, and this will increase abandonment rate and funds paid through check or direct deposit will take days to get transferred. Payment solutions like PayPal are good if merchant needs to handle low-volume sales. But if you are looking for growth, the merchant has to look for alternatives.

What do Business Owners need?

If you want to accept payments through credit card, the first thing that is must is Merchant Account. To carry out online transactions and validate credit card acceptance, a merchant account is mandatory. A merchant account is like any other bank account with a slight difference; it enables merchant/business to accept payment through various means like credit and debit cards. If the merchant has an online merchant account, so this will eliminate the need for credit card processing machine or terminals to accept payments.

Parties involved in merchant account set up process are: 

• The Retailer
• Payment Processor
• Merchant Bank

Three things that every merchant should be aware of when accepting credit card with an online merchant account are discussed below in detail:

ONLINE PAYMENT GATEWAY

A payment gateway is a merchant service provided by e-commerce provider responsible for carrying out transactions or direct payment processing for e-business or retailers. E-commerce transactions (online transactions) are authorized by this e-commerce service (payment gateway). E-commerce service provider can be: 

• Bank
• Specialized financial service provider.

A payment gateway transfers the information between a payment portal and acquiring the bank, where payment portal can be any of the following: 

• Website
• Mobile phone
• IVR machine (Interactive Voice Response)

MERCHANT DISCOUNT RATE

For every payment processing service on debit/credit card transactions, the merchant has to pay. It is a fee imposed on the merchant that he/she must consider while managing overall costing of the business. Merchant must discuss the fee for this service before starting to accept debit/credit card payment. It is basically a card-processing fee that is charged to the merchant. Discount rate includes the following:

• Card processing fee
• Dues
• Assessments
• Markup and network charges

ADDITIONAL FEE

Hence, along with the merchant discount rate, an additional fee is there to the merchant when conducting transactions through an online merchant account. These fees are:

• Statement fee
• Monthly minimum fee
• Authorization fee
• Annual fee
• Chargeback Fee
• Early termination fee
• Customer service fee
• Batch fee (charged when settling a terminal)