Is a Credit Card Merchant Account Needed for my Online Retail Store?

April 30, 2011 | Author: | Posted in Business

For a long time since I begun selling on the Internet, I have been asking the question: “do I need to have a credit card merchant account?” For most sellers starting out, Paypal was the simplest transaction processing method to start with. Another well-known payment processing method is Google Checkout. Via either Paypal or Google Checkout, customers can use credit cards to pay. Both of them provide you with logos that show Visa/Master card acceptance.

You can declare that you accept Visa/Master card through Paypal or Google Checkout. Nonetheless, there are differences for the customers. For instance, if you process a refund when Paypal is used, the money goes back to customer’s Paypal account, instead of their credit card balance. Customers also have to set up accounts with Paypal or Google Checkout. With a merchant account, customers simply enter their credit card numbers into your virtual terminal online. Perhaps for this reason, the merchant account increased my website sales instantly by 100%. When I look at my sales log, I see more than 50% of the sales are paid directly by credit card (instead of going through Paypal or Google Checkout). Snapshot proofs can be seen on my blog: Credit Card Virtual Terminal (see resource link below) where I also discuss detailed comparison of the three payment processing methods. The proof leaves no doubt that having a credit card merchant account is really unavoidable for online/internet sales.

Another distinct reason to have a merchant account is definitely you do not want to let Paypal or Google Checkout to have total control of your money. It took place a few times before when Paypal froze my account due to a dispute and when they claimed that some items on my site violated their Terms of Use. It took almost a week to fix the problems. It can be worse depending on your situations.

Paypal and Google Checkout do have their convenience. They can provide seller protection on international sales. Google Checkout, however, does not have a phone number for support. Their email response time is around 48 hours. Paypal recently changed their rules with which they allow any buyer dispute on items not as described. On top of that, they get to keep the $0.30 surcharge when a full refund is issued. Paypal’s seller protection also is mostly limited to eBay sales and does not work as well on your own websites. It happened to me once before when they granted seller protection on a transaction only to flag 80% of my transactions afterwords (for a long time), in an attempt to make up for their loss.

For details of comparison between the processing methods as well as why you should get a merchant account, see the resource link below.

merchant account

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