What is an internet merchant account?
The internet merchant account is a special business account that allows merchants to accept payments from VISA, MasterCard, American Express bank cards, and customer bank accounts via the Internet. Such an account is meant to process thousands of operations per minute.
A merchant account is a mechanism by which customers can pay for goods or services right on a business website using plastic cards. A merchant account can help to increase sales on the Internet significantly. Payments are possible within POS terminals, through the merchant’s website, via e-mail.
The process of opening an account usually takes up to three business days from the date of the documents application.
In some cases, it is possible to open a bank payment account for the company simultaneously with opening an internet merchant accounts.
When you connect a merchant account, in a universal electronic payment system, it receives a unique identification number.
How does credit card processing work?
To understand why one needs an internet merchant account, let’s see how the whole process of payment takes place.
- Cardholder. A cardholder is a person that wants to purchase on a merchant’s website. Then, a client enters payment information in the payment form.
- Merchant. Every merchant has a payment provider/payment gateway on their websites. This software transmits credit card information to an acquirer, or, directly to a processor of a bank.
- Acquirer. An acquirer, or acquiring bank is an institution that takes part in the credit card processing. It receives the cardholder’s payment data and transmits it to an issuing bank for approval through a credit card network.
- Credit card network. Such payment institutions as Visa and MasterCard route information through their networks and are like a bridge between issuing and acquiring banks.
- Issuing bank. An issuer, after payment data receiving, checks it and sends a response whether to approve it or not. The process of approval includes validation of payment data, enough funds to process payment, an account is not suspended.
- After approval, the issuing bank sends a response to the acquirer, through a card network, then, back to a merchant. On the website, a customer sees the status of a transaction.
What are the requirements to open an internet merchant account?
These requirements are standard. Every bank presents its conditions, and if you want to open an internet merchant account, it is essential to specify them.
- The entity must have a bank account to receive funds from a merchant account. Needless to say, that internet merchant account is used for trade operations, it is not appropriate for placing or storing money. Another important thing that money doesn’t reach a bank account not immediately. The point is to refund the money as soon as possible if there was a mistake or a customer wasn’t satisfied with goods.
- You must provide a set of company documents. It may include a charter, registration certificate, memorandum of association, license, company current account. If the internet merchant account is opened for a non-resident – all documents must be in English with all licenses.
- Indicate the type of business of the company: banks are reluctant to work with entities that are considered to be high-risk.
- In some cases, banks request a credit history of the company: this way, you can be sure that the company has no debts.
- Indicate the geography of activity, sales volume, and estimated turnover of the company.
- Personal data of beneficiaries; When opening an internet merchant account, this is mandatory.
- The website address. Moreover, it is necessary to place a detailed description of goods and services on the website. It mustn’t be on free hosting, and all its pages must be in the same domain zone. The pages from which customers will pay for purchases must be located on the secure page of the processing site, and not on the site of the merchant’s company. It is impossible to open a merchant account for ‘under development’ websites.
- To specify Terms and Conditions and Refund Policy.
Advantages of the internet merchant account
- A large number of operations. Using such a payment scheme via the Internet allows thousands of transactions per second.
- Payment Security. Indeed, if a customer does not receive the goods or services, then he can send a complaint to the issuer and withdraw the money back. Therefore, for a client, payment with their card is a more reliable way than, for example, payment with cryptocurrencies or other payment systems.
- Tax optimization. Opening a merchant account for an offshore company will provide an opportunity to do business while minimizing control and paying taxes in any country.
The bottom line
An Internet merchant account allows you to adjust any payments for goods or services online. Moreover, this procedure is available absolutely at any time anywhere in the world. It does not matter if you want to open an online store or a retail outlet; such an account will become a reliable assistant in the providing of safe e-commerce. As the commercial turnover in the framework of e-commerce increases every year, more and more people start using cashless payments, and opening a merchant account will help you to be in a competitive environment, expanding your financial capabilities.