Merchant Account Components:

There's so much more to merchant accounts than, let's say, the merchant account. There's the shopping cart, the gateway, and of course, the merchant account. All are connected to each other and a credit card transaction cannot occur if one component is missing.

To break the process down a bit, the customer goes to your website and clicks the "buy" button. That selection is then added to the shopping cart. When the customer is at checkout, the customer inputs his or her personal and financial information and that information is recorded in a secure form. That information is then transmitted (from the shopping cart) to the payment gateway service, which transmits the information to the relevant financial networks. With a successful transaction, the customer's credit card is debited and your merchant account is credited. You can then, once the funds have cleared, transfer money to your ordinary business checking account.

The payment gateway is the processor of the whole procedure. Acting as a liaison between the shopping cart and the merchant account, it provides the transaction necessary to get the funds to the appropriate place. Checking for validity, encrypting transaction details, ensuring that the information is sent to the correct destination, and then decrypting the information sent back to the shopping is the entire process for the payment gateway.

When trying to select a payment gateway, there are two main things to consider. Most importantly, you must make sure your payment gateway is compatible with your shopping cart. If you don't already have a shopping cart, get the payment gateway service to recommend one. They should be more than happy to provide a list of companies that are compatible with their software. When looking at gateway services, it's not always wise to go with the one with the lowest price. Low-priced gateway services tend to have limited amounts of shopping carts that are compatible with them. This means that set-up costs may be more than you think. So, weigh your options carefully before selecting a payment gateway service.

Secondly, make sure your payment gateway service offers AVS (Address Verification System) protection. AVS verifies the customer's billing address with the card issuer, thus preventing fraudulent transactions. Using AVS can also mean that your Merchant Bank will reduce your fees.

Broken down, the merchant account process is rather simple. The entire transaction goes from shopping cart to payment gateway to merchant account. Just keep in mind that your main concerns are keeping costs low, but security high.

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