Ecommerce Credit Card Processing: Everything You Need to Know

Ecommerce refers to transactions that occur through an electronic payment system. Typically associated with online credit card payments, it automates transactions between customers and merchants, offering fast, secure payment.

Processing credit payment online has become a financial necessity for merchants. Research shows that the average cash purchase is nine dollars, compared to forty dollars for the average credit purchase. Research also shows that ecommerce credit card processing can increase a merchant’s sales by over seventy percent.

Getting Started With Ecommerce Credit Card Processing

The merchant account industry is merchant friendly, with most merchant service providers (MSP) accepting over ninety percent of applicants. Still, applying for a credit card merchant account is an official process that requires official documentation such as:

Articles of Incorporation: Incorporated businesses are required to submit copies of their articles of incorporation. Unincorporated businesses (e.g. sole proprietorships) are required to submit their “doing business as” (DBA) name.

Business license: If a business’ line of work requires it to have a state or federal license, a copy of the license must be submitted.

Financial Statements: An existing business may be asked to provide two years of financial statements. The owner of a new business may be asked to submit two years of personal financial statements. In some cases, both types of statements are submitted.

Processing statements: A business that switches from one MSP to another may be asked to provide recent processing statements.

Sample Check: A voided check for the bank account of which a business wants its money deposited is required. The check must contain the business’ official name (i.e. legal name or DBA name).

Personal Guarantee: In some cases, a business must provide a guarantee that holds it responsible for certain financial situations (e.g. a certain level of chargeback fees). Public corporations and non-profit entities are usually exempt from guarantees.

As witnessed by the high acceptance rate of applicants, most businesses meet these requirements with ease. Once their account opens, they begin accepting credit payments and paying account fees.

Ecommerce Credit Card Processing Fees

Most MSPs charge the following types of fees:

Transaction Fee: This is charged when transaction authorization takes place.

Monthly Minimum Fee: This is the difference between the minimum amount of account fees a merchant must accrue in one month, and the amount it accrues, when the former is greater.

Monthly Statement Fee: This is charged for the preparation of a merchant’s monthly statement.

Gateway Fee: This is charged for use of a payment gateway, such as an Internet payment gateway.

Discount Fee: Expressed as a percentage, this is a combination of fees, dues, and charges a merchant pays for the privilege of using a credit card merchant account.

How the Payment Process Works

When a merchant accepts payment through a merchant account, the transaction is sent to the merchant’s acquiring bank, which “acquires” the transaction. An acquiring bank is the bank the merchant’s MSP used for account processing. Once payments are processed and account fees are withdrawn, the bank sends the merchant’s money to its business checking account, usually in under seventy-two hours.

AVPS has the Solutions You Need

At AVPS, we provide accounts that accommodate numerous types of merchants. If your business needs an ecommerce credit card processing account, call us today. We have over twenty-five years of experience in both Small Business Merchant Accounts and servicing merchants.

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