Merchant Account Payment Gatways
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Accepting Online Payments and Credit Card Processing
Due to the astonishing growth of internet commerce, many businesses in the UK have started selling their wares online. But becoming an online merchant takes more than just a functioning website, businesses must also obtain a merchant services account. These accounts make accepting online payments cheap and easy. Well, at least they make it easy.
What are they? A merchant service account gives online businesses the ability to accept credit and debit card payments. It also gives clients the confidence they need to complete transactions because they know that all merchant accounts are backed and insured by a reputable financial institution, often a bank.
It is these institutions that actually process the payments and ensure that the transaction runs smoothly. For this service the merchant service provider takes a small commission, often only about two or three percent. But this is always quite a bit higher on the internet. The reason for this is simple: when a credit card payment is made in a store, the merchant has a signed copy or PIN of the original receipt. But online sellers have no such evidence.
This leads us to the scourge of internet businesses, chargebacks. A chargeback occurs when a customer demands a refund for a product or service from his credit card company. The credit card company will then contact the merchant service provider who must investigate the request and then either refund the money or deny it. Either way it costs the service provider time and money.
The provider then passes these chargeback costs onto the merchant in the form of higher commissions. These rates are often based on the level of risk of the industry in which the company competes. It is not at all uncommon to see commission fees as high as 8 or 9 percent.