Do you need a merchant account? (and what is it?)

As an entrepreneur, whether you are selling products or services, you need a method of receiving payments online via a credit or debit card. The options on how to best accomplish this can be a point of confusion for many entrepreneurs…

Here’s the quickest way to accomplish this. Paypal. With a Paypal account, you can create payment buttons on your site and accept credit and debit cards. It is a simple shopping cart and merchant account all in one.  With a Paypal Standard account, approx. 2.9% will be deducted from any payment you receive. Many experienced entrepreneurs might thumb their nose at Paypal and think a merchant account is a must and more professional. However, now, Paypal also offers a merchant account option called Payments Pro. I’ll go into detail in this in another post. Bottom line, if you want to get up and running quickly, even today, start with Paypal.

If you decide Paypal is not for you, then you’ll need a Merchant Account. Actually, you will need a:

  • Merchant Account
  • Payment Gateway
  • Shopping Cart

There are fees involved in all of these, including monthly fees and percentages, so do your research as it can add up. And, they all need to be compatible with one another.

First you’ll need to apply for a Merchant account with a bank. This typically takes sever weeks and involves a credit check. This is a business account that allows you to accept credit cards. You can get a merchant account from your regular bank or research for more competitive pricing. Again, this gives you the ability to accept credit cards. Chase Payment Tech is an example of a reputable merchant account provider.

Second, you’ll need to sign up with a Gateway account and will need to connect this with your merchant account. The gateway processes the payment and sends the money to your merchant account. Most of my clients use authorize.net as their gateway.

Lastly, you’ll need a Shopping Cart. This allows you to create buttons to put on your website. It captures the sale and sends information to the gateway who sends it to the merchant account. At the end of this payment cycle, the merchant account deposits money into your checking account. Many of my clients use 1ShoppingCart as there shopping cart. There are other options, but this is popular as it’s marketed to be an all-in-one; meaning that in addition to creating buttons, you can create optin boxes for your website, manage your contact list, send email newsletters and manage your affiliate program.

As you can see, the merchant account option is more complex. We can help you through this process if you would like. We can also help you get started with Paypal. :)

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