Friday, 20 July 2012

Part 2 – Choosing the right merchant account for you

Following on from last week’s blog post on shopping carts, the next vital component to accepting payments online is choosing a merchant account.

Currently in the industry, to accept payments online you will need to get a merchant account from a merchant acquiring provider.  There are seven of these in the UK and they are usually banks, however there are a few non banking providers such as CashFlows and Elavon who offer the same service. A number of payment gateways can also source a merchant account directly.

Essentially the merchant acquirer acts as a go to between you and your customer’s issuing bank to authorise and verify each transaction and collect the funds from the cardholder, including paying any fees to the issuer. They also act as an intermediary if there are any card disputes or refunds.

It is important to keep in mind the following key points when you are looking for your merchant account:
  • What is the set up cost of the account and are you tied into a contract for a set period of time? Some acquirers insist on contracts of 36 months but hide this away in the small print.
  • What is the set up time for the account and what information do you need to send in? The fastest providers can set you up in less than a week, whereas some banks can take over a month!
  • What is the cost per transaction charge (sometimes called Merchant Service Charge or MSC)? Make sure you compare this against at least another two providers.
  • Do you get any other services integrated into the merchant account such as e-invoicing or a virtual terminal etc?
  • What gateways can the merchant acquirer plug into and are one of these compatible with the gateway you are using for your site?
All the points I have highlighted vary dramatically from one acquirer to the next so it is essential to shop around in the same way you would your phone contract or electricity bill before you choose to ensure you get the merchant account and provider that suits your business needs.

It is also important to remember that there are a lot of changes happening in the financial services industry, as I am sure you are all well aware of. This shake up will bring about some pretty dramatic changes in the service and products businesses will be offered. This will mean only great things for you as financial service providers will be forced to become more competitive and innovative with their products and services.

It’s worth keeping this in mind when looking at tying yourself into lengthy contracts for a merchant account and other services, as if a more appealing offering comes to the market with a fully integrated account for example, you would want to be able to switch provider easily if it was a better fit for your business.

With all the uncertainty in the industry it is a great time for you to shop around and find the best merchant account and accompanying service for your business. Happy shopping!

Watch this space out for next week’s blog!

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