It is more than possible to start an online business without a merchant account, but for a truly professional business, it is a necessity. A merchant account allows you to accept credit cards and present a more professional face to the customers you are attempting to convince to buy your products. There are two main ways to set up a merchant account, which we will examine here.
The first way is the easiest and it really is a bit like cheating. Instead of setting up your own merchant account, you can go through a popular online payment service like PayPal, Ebid, or Moneybookers. These services accept credit card payments from your customer and provide a variety of other services. The downside is that your clients will need to have an account with the payment service that you choose, which can present problems for those who don’t feel comfortable with this sort of payment method.
In general, PayPal is the most widely accept payment service and they offer a range of merchant tools, including a full shopping cart that can be used on your site, with any product or price that you choose. Before deciding which service to go with, you need to do some research and make sure that your customers will be likely to use them. There are literally dozens of different online payment services, so you will have a wide range of options. Most of these services charge a percentage of the transaction and may have further merchant tools fees that you should be aware of, so check this before deciding on one.
The second method of setting up a merchant account is to go through a merchant account banking service. These are also available online, or you can talk to your bank about setting one up that can be used online. The majority of ecommerce owners go with online services, since they are already optimized for website transactions and are easily accessible.
A real merchant account (not a PayPal or Moneybookers account) will cost you a fee to set it up. This can range anywhere from $50 to hundreds of dollars, depending on the service provider. These accounts will also charge a fee each time a credit card is processed, which is standard in the business world. However, the advantages of having a merchant account outweigh the costs in many cases.
With a valid merchant account, you will be able to accept credit cards right on your website, which is a big advantage to many ecommerce websites. Also, many service providers will charge lower processing fees than real world banks and you have 24 hour, instant access to your transaction information.
So, yes, you can begin your ecommerce venture without an online merchant account, but if you plan to do any big business, you will need to get one. Merchant accounts are essential to ecommerce and any other type of online business.