All the information you need to find a merchant account that best meets your needs !
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Guide to E-Commerce


Beginners' Guide to E-Commerce

Internet Merchant Account
An Internet Merchant Account is a special account that permits the acceptance of credit cards over the Internet. Transactions are processed online, in real time. While the customer waits, the system checks the credit card to be sure that it has not been reported stolen, has not expired, and is listed to the same address that the customer has provided. If the card is approved, both customer and merchant are notified that the sale has transpired. This type of account is a stricter banking relationship than one involving face-to-face transactions. Web transactions do not gather signatures from purchasers and therefore there is a higher risk of

This method of accepting payment is the #1 most important ecommerce method you can offer your customers. Without it, your sales will be much less than need be. Many banking institutions are providing Internet Merchant Accounts to eligible merchants. However, it is even more difficult to arrange this than it is to get a regular Merchant Account.

If you are accepted for an Internet Merchant Account through your bank, you must ensure that the online transactions occur over secure lines (often called Secure Sockets Layer or SSL). In some cases, the bank will provide the secure lines as a component of their package. In other cases, you will be responsible for making your own arrangements.

Your web site host might offer secure lines for an additional price, or you can enlist the services of one of the many companies that provide this service.

Note: If you are making a purchase online, you can tell whether you are on a secure line. In
Internet Explorer, a little gold padlock will appear at the bottom toolbar indicating that it is
secured. In Netscape Navigator, a similar symbol will appear.

Credit Card Processing Services
Similar to high-risk processors, these credit card processing services provide highrisk merchants with the ability to accept credit card transactions online. Many have arrangements in place to process all of the major credit cards. Processing services handle the transactions on your behalf, then issue you payment for sales according to a pre-arranged schedule. You do not need a secure line at your own web site, since the actual transaction occurs on the processor's site, not on yours.

Arranging for these services is easier than getting a merchant account through the bank. Although you will probably be asked to pay a lump sum at startup, it will be much less than a bank would require.

Card processing companies have sprung up like mushrooms. Visiting an Internet Search Engine like Google ( and running a search for "Accept Credit Cards" will give you so many listings that making a choice can be difficult.

Remember caveat emptor (Buyer Beware!) Not all processing services are equal and not all are reliable. Horror stories abound about processing services that don't measure up. Before you sign on the dotted line, consider the following:

1. What happens if your processor goes broke or shuts down? In most cases, you will lose the money you invested in their service, as well as any sales fees that are owing to you. You will want a company with a stable record.

2. What is their track record for transferring sale funds to their merchants? Do they transfer every couple of weeks or might you wait for months to be paid?

3. Do they collect any local taxes that may apply to sales coming from your own country, state or province? If they don't, you are the one who will have to make things right with the Taxation Department.

4. Do they provide timely and accurate sales reports? Without proper reports, you won't have the income tax information that you require come tax day, nor will you have the full information you need to analyze your sales figures.

5. Are they using the sophisticated technology that can intercept credit card fraud before it happens?

6. Do they respond promptly to email or phone messages? How is their customer service?

7. What are the terms for canceling the contract? Are you locked in for an extended period? Is there a hefty penalty for cancellation?

So how do you find a service with a good track record?

First, avoid the "Accept Credit Card" spams that fill your email mailbox. It's a good idea to subscribe to one of the mailing lists that Internet Merchants use, then ask list members what services they are using and what their experience has been. Be cautious of effusive
testimonials. At least some of the glowing testimonials that you encounter are written by marketing professionals and given to associate resellers to distribute as their own opinions.

• I-Sales, published by John Audette from Adventive is an excellent mailing list to read. Members are generous with their advice and willing to share their experiences. Subscribe for free at
• Canadians will benefit from subscribing to the Canada Talks Business mailing list. Subscribe at
• For other business- related discussion lists, check out the offerings at Yahoo Groups.

Credit card processing companies charge an array of fees for their service. Since the processor is essentially taking a risk on your behalf, expect higher transaction fees than a bank will charge for a Merchant Account. Shop around and compare rates, but realize that cheaper is not always better. A low-priced service may not be building the necessary financial reserves and therefore may not have long-term stability. Remember, if they go broke, you lose your startup fee and any other monies tied up in their service.

Here are the fees that you might reasonably expect to be charged:
1. A set up fee.
2. A monthly service fee
3. Transaction fees per sale
4. Credit card discount fees (a percentage of the total sale)
5. Holdbacks. As a safeguard against chargeback losses, many resellers will hold back a percentage of each month's transactions for a period of several months. Since they do not require the sizable deposit that banks require, they protect themselves through holdbacks.
6. Chargeback fees. (Can range as high as $50 or more per chargeback)
7. Fees to transact merchant-issued refunds.

One final thought on card processing services. Almost all of the services you encounter on the Net are available only to residents of the US. Residents of other countries check the section for International Merchants.

ClickBank Company's card processing service has been highly recommended for persons selling digital products (files, software, ebooks, digital music, etc.). The setup fees are modest and the service is said to be available to merchants anywhere.




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