Businesses that aim to accept credit card payments online should consider setting up a merchant account for online credit card processing. Merchant accounts require the use of a payment gateway to connect the merchant account to the shopping cart program for a seamless way for customers to pay for goods or services online. Even though it can be more costly and time consuming to set up, it is generally cheaper in the long run in comparison to alternative payment processors.

Basics to Online Merchant Credit Card Processing

Merchant accounts are business bank accounts that are used by businesses to collect the funds received by customers that pay via credit cards or debit cards. In the past, businesses used to have to apply for a merchant account for each type of credit card. Now most merchant accounts allow the business to accept all major credit cards, but may charge additional fees for accepting credit cards such as Discover or American Express.

Businesses can apply for a merchant account at banks or financial institutions, or with independent sales organizations (ISOs). If the business is able to provide documents showing its sales history, then it should apply for a merchant account through a bank, such as Bank of America and RBS WorldPay. However, some startups may not qualify for a merchant account at a bank or financial institution without a sales history, so they must rely on an ISO. An ISO acts as a reseller, or middleman, between the business and the bank and charges a premium for its service.

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