You’ve probably heard the horror stories. A wildly successful sale of an information product results in a random PayPal lockdown and the seller is not only left with thousands of dollars in his or her account that he can’t access, but now has no way to get paid.
Or maybe you sell an eBook to a market that is not Internet savvy, and who has a distrust of PayPal. They would much rather pay by credit card through a more familiar shopping cart interface.
Whatever the reason, once your business evolves into one that offers a product for sale, you will probably find yourself in need of a second option for payment processing, and for most people, that means applying for a merchant account.
Merchant Account Basics
A merchant account is simply a middle man between you and your customer’s credit card. They handle the transaction and then pass the funds on to you – minus their fees, of course. Most merchant accounts require a shopping cart or membership script to provide a customer-facing page where buyers can enter their information. They are not stand-alone applications, but rather operate in the background. Your customers will never see – or likely even be aware of – your merchant account.
Choosing and Applying for a Merchant Account
Merchant accounts, or credit card gateway accounts, come in just about as many varieties as credit cards do. Your bank can set you up with one, or you can apply online. It pays to shop around, though, because application fees, monthly fees, and per transaction processing fees vary wildly from account to account.
Also, much like credit card accounts, many merchant account providers have strict requirements, so you’ll need to make sure you qualify for whichever service you choose. You can expect to have to pass a credit check and possibly a background check. You may also be required to provide documentation of your business structure. Some merchant accounts do not allow certain types of businesses, such as adult-themed websites, make money online products, or gambling-related sites, so be sure to carefully read the terms and conditions before applying.
If it seems like a lot of headaches to apply for a merchant account then connect it to your shopping cart system just so you can take credit cards, there might be an easier way. Several companies offer all-in-one solutions, meaning your payment processor and shopping cart software are both managed from one location. Not only is this less hassle to set up initially, but it can significantly reduce your expenses as well.
Some of the more popular all-in-one solutions are PayPal (as we already mentioned), 2 Check Out (or 2CO), and Google Checkout. While these might be more convenient to set up, be aware that their fees can be higher, so be sure to carefully read their terms and pricing plans before jumping in. However we as South African’s cannot use all of the above options. A viable option is PayFast, a South African based company that allows you to accept credit card payments from anywhere in the world.
Whatever option you choose, it’s important to have a clear idea of why you need a merchant account before doing your research. Once you’ve determined your needs, it will be much easier to wade through the many available options and chose the one that best works for you and your business.
You can find out more about PayFast here: https://www.payfast.co.za/