Internet Credit Card Processing
The popularity of online shopping began setting milestones after the first secured eCommerce transaction took place in 1994. As the growth in payment gateway services and the availability of payment processing services, online transactions have taken off. 15 years later, the eCommerce industry surpassed another milestone when online sales surpassed general merchandise sales. This trend has set the tone that businesses need an internet merchant account to offer online credit card processing as a way to remain competitive.
Small to medium businesses are less likely to see the need for online merchant processing services. Many of these size businesses focus on their retail storefronts or local proximity to customers to grow their businesses. As consumer spending habits have driven e Commerce sales, industries that once seemed insulated from the internet have now been affected. As new retailers and service providers have taken what was once a local industry and revamped it to become available online, local merchants feel the need to adapt. This has been the driving force behind the demand for online merchant account services.
Working an internet payment processor that offers businesses the tools necessary for smooth operations is essential for success. Whether merchants require the use of a virtual terminal or only need a payment gateway, Allied Payments can help. Our online merchant account services provide businesses with the reliability and security to run smoothly and thrive over the internet. As businesses expand, our online payment processing services can quickly scale accordingly, preventing any delays or limitations in growth.
How an Internet Merchant Account Works
In a nearly identical manner as a retail payment card transaction, online payments follow much of the same process. With the addition of a payment gateway acting as the credit card terminal, a merchant's website is securely linked to the credit card processor
A card that is accepted through a merchant's website or entered into a virtual terminal will be authorized using many of the same steps. Merchant account authorization requests usually follow the steps below when originating online:
- Shopping Cart
A secure online program that is part of the merchant website. The shopping cart allows customers to store items and send card account information to the payment gateway.
- Payment Gateway
Secure online application that receives customer payment card account information from the shopping cart and sends the account file to the payment processor. The payment gateway is the link that the website uses to reach the internet merchant account provider.
- Payment Processor / Merchant Acquirer
Many times the same organization. The payment processor receives payment authorizations and other merchant transactions. The merchant acquirer manages the transfer of funds from the customer's card issuer.
- Card Association
The financial network that allows the merchant acquiring bank to communicate securely with the customer's payment card organization.
- Card Issuer
The financial institution that manages the customer account by approving or declining merchant authorization requests.
The process of authorizing an internet payment can take only a couple of seconds from start to finish. Once the cardholder information is transferred from the customer's web browser through the merchant shopping cart, it is entered into the payment gateway. At this point, the card information is received by the payment processor and securely sent to the cardholder's bank.
Merchants can also use the payment gateway as a virtual terminal, allowing for manual payment authorizations. With a virtual terminal, MOTO transactions can be entered through a computer or a card reader can be used to swipe customer payment cards.
The card issuer will perform fraud and financial checks to verify the validity of the authorization. A response will be sent back through the Card Association's network to the authorization terminal location. This will inform the merchant if the transaction has been approved or declined.
At the close of business, a finalized request will be sent from the merchant to the customer's card issuing bank for the total required. The card issuer will release the funds to the merchant acquiring bank who will settle the funds to the merchant's bank account.
Similar credit card processing in a retail environment, an internet merchant account uses the same authorization process. Many merchants operating both retail and online businesses will use a payment gateway and it's integrated virtual terminal. This allows merchants to manage all their transactions through one location.
Starting Online Credit Card Processing Services
Most payment processors and merchant acquirers will require similar documents for their internet merchant accounts. Some of the most common documents required by underwriters to complete their due diligence process include:
Acquiring Banks and Payment Processors will require prospective merchants to completely fill out an application
Part of the KYC process performed by underwriters to verify the applicants. Some underwriters might require more information in addition to a driver's license or passport.
- Voided Check
The Acquiring Bank or Payment Processor's accounting team will want a voided check from the business checking account to verify the settlement account for payments.
- Supporting Documents
Depending on the type of business, the size or its history; underwriters might require additional documentation including prior processing statements, bank statements or tax returns.
Merchants applying for a high-risk merchant account will usually require additional documentation for underwriting.
Choosing an Internet Merchant Account Provider
Finding the best internet merchant services provider can save headaches, time, and money in the future. Partnering with an internet payment processor that offers flexibility and functionality for e-commerce businesses will help businesses grow without limitations. Our internet merchant services include:
- Online Merchant Account Services
Allowing businesses the ability to accept Visa, MasterCard, American Express and Discover card payments online or through their website. A necessity for any e-commerce retailer or growing merchant.
- Payment Gateway
Using a fully secure, PCI Compliant gateway will allow customers to safely send payments. Quick and easy to install, businesses will be able to accept payments online without any security concerns.
- Virtual Terminal
Businesses that use an onsite shopping cart program might also want the ability to process instore or MOTO transactions. Merchants can
Documents for Application
Merchants that are about to apply for an internet merchant account will need to know many of the required documents and information they will need to provide.
Banks and payment processors will require that merchants in need of a merchant account complete an application for underwriting. While the underwriting process usually takes a few days to complete, providing a detailed application can expedite the process.
Part of all underwriting done by all merchant services companies is their Know-Your-Customer, also known as KYC. Along with the information provided from an application, underwriters are able to properly confirm the identity and background of applicants.
- Corporate Documents
Most payment processors will want to see the merchant operating a registered state corporation. Even for some of the smaller companies needed an internet merchant account.
- Banking Information
Many financial institutions will want to know information about the finances and history of a business applying for internet credit card processing. Confirmation that the merchant maintains adequate reserves to cover any costs associated with their payment processing services.
- Credit Card Processing History
While a history of credit card processing is not mandatory, merchants that have a history will usually be required to show the last few months. Underwritings use this information to view how the merchant runs their business and if they can see any potential problems.
Online e-commerce businesses will be required to provide underwriters with a completed and functional website prior to approval.
Open your Online Merchant Account Today!
Merchants in need of payment processing services for their online businesses can find answers to their questions through our blog. Our team of payment processing professionals will be happy to help any merchant with questions or concerns about their business. Contact our helpful staff for more information or to get started accepting credit cards with an internet merchant account today.