An ecommerce web hosting merchant account allows your online business to accept credit card payments. A merchant account is a must for eCommerce web hosting users because it allows your customers to pay with credit cards. It can also be used in conjunction with payment gateways and shopping carts. Additionally, a merchant account is useful in transactions both over the phone and face-to-face. In eCommerce web hosting, a merchant account serves as the third party between the credit card processors and the website. It can be used for purchases manually submitted by the website owner or entered by the customer. Simply put, a merchant account is the reason you get paid for every sale you make.
Accepting credit cards online is important because consumers tend to spend more with their credit card than with other modes of payment. In fact, using credit cards for online transactions has been shown to increase profitability by up to 52%.
Those who are new to ecommerce web hosting may be swayed by various merchant accounts that claim to be the best, but in reality are not. If you’re looking to get an eCommerce web hosting merchant account, be sure to watch out for ridiculously high transaction fees and hidden charges.
There are some ecommerce web hosting providers that offer cheap business accounts but pay with their fees. It makes sense to get a plan for your eCommerce web hosting needs, especially if you’re doing a lot of business per month. You may want to go with a plan that has a higher cost per month but a lower transaction fee.
In order to obtain a merchant account, the business owner must meet certain requirements set forth by the bank. Business account providers set certain requirements based on the size of your business. For one, your online business should not have appeared in the MATCH file, which is the file list for terminated merchant accounts.
Like a credit investigation institution, the MATCH file contains information about online businesses that have failed to properly handle their business account processing responsibilities. If your name appears on the MATCH place, you should get rid of it by working with the company that placed you on the MATCH list. Otherwise, you will not be able to be approved for a merchant account.
For online businesses that have projected sales of more than $5,000 per month, business account providers may require you to provide documents such as tax returns; proof of partnership, corporation, non-profit or limited liability status; current account statements or statements of previous operations. You may also be asked for trade references.
Compared to a physical business, it is more difficult for an online business to acquire a merchant account because there are more risks associated with transactions made over the Internet. There are three types of risks that online businesses present when obtaining a merchant account, one of which is credit risk. Business account providers carefully consider how much an online business might owe them in the future. For example, the credit risk is relatively low for a new business that incurs monthly fees of $5,000. Simply put, a business’ credit history is a major factor in the business account provider’s decision-making process.
Another type of risk that merchant account providers are most concerned about is the risk of fraud. To the extent possible, merchant account providers want to ensure that they incur very few chargebacks for fraudulent credit card transactions. This is because if a customer demands a charge for the sale, the bank is obligated to pay them back. The refund is transferred to the provider of the merchant account. Ultimately, it is the trader who bears this loss. Newer online businesses are said to be at a higher risk of fraud.
Contingent liability is another type of risk that includes not only fraud risks, but also other risks related to unforeseen marketing circumstances. Businesses that offer lifetime service guarantees have a higher risk of contingent liability because the merchant account provider may pass on liability in the event the business goes out of business.
There are several ecommerce web hosting providers that you can find that offer merchant account services. There are a number of ecommerce web hosting plans that allow you to get a free domain registration. Several business account providers can help you find the right domain registration for your online business.
Merchant account software will be needed to execute online transactions, in addition to your shopping cart. Many eCommerce web hosting services offer software that is paid monthly.