The popularity of online shopping began setting milestones after the first secured e-Commerce transaction took place in 1994. With the growth in gateway services and the availability of payment processing services, online transactions have taken off. Fifteen years later, the eCommerce industry surpassed another milestone when online sales surpassed general merchandise sales. This trend has set the tone that businesses need an internet merchant account to offer credit card processing to remain competitive.
Working with an internet payment processor that offers businesses the tools necessary for smooth operations is essential for success. Whether businesses require a virtual terminal or only need a gateway, Allied Payments can help. Our Internet merchant account services provide businesses with the reliability and security to run smoothly and thrive over the Internet. As a business expands, our online payment processing services can quickly scale accordingly, preventing any delays or limitations in growth.
Does an Online Merchant Need an Internet Merchant Account?
Today, almost every business needs online merchant processing services. While many of these businesses focus on their retail storefronts or local proximity to customers to grow their businesses, the competition from online is immense. As consumer spending habits have driven ecommerce sales, industries that once seemed insulated from the Internet have now been affected. As new retailers and service providers have taken what was once a local industry and revamped it to become available online, local businesses feel the need to adapt. This has been the driving force behind the demand for internet merchant account services.
How an Internet Merchant Account Works
In a nearly identical manner to a retail payment transaction, online payments follow much of the same process. With the addition of a gateway acting as the credit card terminal, a merchant’s website is securely linked online to the credit card processor.
A credit card accepted through a merchant’s website or entered into a virtual terminal will be authorized using many of the same steps. Online credit authorization requests being sent through merchant accounts usually follow these series of steps:
Shopping Cart
A secure online program that is part of the merchant website. The shopping cart lets customers store items and send credit card information online from their browser to the gateway.
Payment Gateway
Secure online application that receives customer payment credit card information from the shopping cart and sends the customer file to the payment processor. The gateway is the website’s link to the internet merchant account provider to secure online transactions for the business.
Payment Processor / Merchant Acquirer
Many times the same organization. The payment processor receives authorization from the gateway and other online merchant transactions. The online merchant acquirer manages the funds’ transfer from the customer’s bank credit card issuer.
Card Association
This financial network maintains secure online access for all merchant-acquiring bank members to communicate with one another. This is the backbone of the payments networks.
Card Issuer
The financial institution or bank that manages the customer account by approving or declining online merchant credit authorization requests.
Authorizing an internet payment can take only a couple of seconds from start to finish. Once the cardholder information is transferred online from the customer’s web browser through the merchant’s online shopping cart, it is entered into the gateway. At this point, the credit card information is received by the payment processor and securely sent to the cardholder’s bank.
Businesses can also use the gateway as a virtual terminal, allowing manual payment authorizations. With a virtual terminal, MOTO transactions can be entered through a computer, or a credit card reader can be used to swipe customer payment bank cards.
The credit card issuer will perform fraud and financial checks to verify the validity of the gateway authorization. A response will be sent back through the Card Association’s network to the authorization gateway terminal location of the business. This will inform the online merchant if the transaction for a credit request has been approved or declined.
At the close of business, a finalized credit request will be sent from the business to the customer’s bank for the total required. The credit card issuer will release the funds to the merchant acquiring bank, which will settle the funds to the merchant’s bank account.
Like credit card processing in a retail environment, an Internet merchant account uses the same credit authorization process. Many retail and online merchants use a gateway and its integrated virtual terminal. This allows online and retail businesses to manage all their transactions through one location while saving money on payments and services.
How Merchants Should Choose a Merchant Account Payment Provider
Finding the best internet merchant services provider can save headaches, time, and money on future payments. Partnering with an internet payment processor that offers flexibility and functionality for ecommerce businesses will help businesses grow without limitations. Our internet merchant services include:
Internet Merchant Account Services
Allowing businesses to accept Visa, MasterCard, American Express, and Discover payments online or through their website. A necessity for any ecommerce business or growing internet merchant.
Payment Gateway
A fully secure, PCI Compliant gateway will allow customers to send payments safely. Quick and easy to install, businesses can accept payments online without any security concerns.
Virtual Terminal
Businesses that use an onsite shopping cart program might also want the ability to process in-store payments or MOTO transactions. Businesses can accept online transactions using web-based virtual terminal software and adding a credit card swiper.
Internet Merchant Documents for Merchant Account Approval
Businesses about to apply for an Internet merchant account need to know many of the required documents and information they will need to provide.
Application
Banks and payment processors will require that businesses needing merchant accounts complete an application for underwriting. While underwriting usually takes a few days, providing a detailed application can expedite the approval process for the online business.
Identification
Part of all underwriting done by all merchant services companies is their Know-Your-Customer, also known as KYC. Along with the information from an application, underwriters can correctly confirm the business applicants’ identities, pull credit scores and check backgrounds.
Corporate Documents
Most payment processors will want to see the business operating a registered state corporation. Even some of the smaller companies needed an internet merchant account.
Banking Information
Many financial institutions will want to know information about the finances and history of a business applying for Internet credit card processing. Confirmation that the merchant maintains adequate reserves in their bank to cover any costs associated with their payment processing services.
Credit Card Processing History
While a history of credit card processing is not mandatory, businesses that have a history will usually be required to show the last few months. Underwritings use this information to view how the merchant runs their business and if they can see any potential problems.
Website
Online ecommerce businesses must provide underwriters with a completed and functional website ready to accept payments before final approval.
Credit Card Payment Fees for Internet Merchant Accounts
The fees on merchant accounts vary slightly between retail locations and Internet merchant accounts. Businesses can generally have the same fee structures regardless of the type of account. While some extenuating circumstances might exist, businesses can generally negotiate between a tiered pricing format or an interchange-plus plan.
Regardless of whether they are internet-based or retail storefronts, accounts will have several monthly fees. These are primarily account maintenance, PCI Compliance, and transactional fees. Most payment processors will not itemize these fees, so determining the exact merchant cost can sometimes be complicated. This means that fees can have different names between payment processing providers.
The main difference between accounts will be the discount rate and some of the additional services required for card-not-present transactions. Discount rates are generally higher because the risk of fraudulent online payment transactions increases exponentially when the EMV chip is not used to make a purchase. Online payment transactions will also require an AVS check upon approval, another cost that a business with storefront transactions do not incur.
Internet merchant locations must also use a gateway to link their shopping cart to their acquiring bank. Usually, an online business will only incur a fixed monthly fee and a per-transaction fee. Some merchant accounts might include these gateway fees, so understanding a transaction’s final cost is imperative when comparing different online business credit card solutions.
Merchant accounts are similar when comparing every transaction’s functionality and cost structure. Online transactions have additional fees that general retail business merchant accounts do not need to charge. For this reason, a business needs to understand what they are paying for each fee to perform a money-saving side-by-side comparison of different bank merchant accounts.
Open a Merchant Account and Accept Credit Card Payments Today!
Online usinesses needing gateway or payment services for a website can find answers to their questions through our website. Our team of online payment processing professionals will be happy to help any merchant with questions or concerns about saving money while increasing business sales. Contact our helpful staff for more information or to start accepting online credit cards with your business using an Internet merchant account today.
Frequently Asked Questions (FAQ)
What is an Internet Merchant Account?
An Internet Merchant Account is a type of bank account that allows businesses to accept and process online credit and debit card payments. It acts as a holding account before the funds are transferred to your business bank account.
How do I get an Internet Merchant Account for my business?
You can apply for an Internet Merchant Account through a payment processing provider like AlliedPay. The process typically involves submitting business information, banking details, and underwriting approval to ensure your business is a good fit for online processing.
Why do I need an Internet Merchant Account for online sales?
To securely accept card payments on your website, a merchant account is essential. It allows your payment processor to verify transactions, mitigate fraud risks, and ensure timely settlement of funds into your business account.
Is there a difference between a merchant account and a payment gateway?
Yes. A merchant account holds the funds from card transactions, while a payment gateway is the technology that securely transmits payment information from your website to the payment processor. You need both to process online payments.
What types of businesses need an Internet Merchant Account?
Any business selling products or services online — including eCommerce stores, subscription services, SaaS platforms, and virtual consultants — needs an Internet Merchant Account to process digital payments.
How long does it take to set up an Internet Merchant Account?
Setup times vary depending on your business type and risk level, but many accounts can be approved and ready within 24 to 72 hours, especially when working with an experienced provider like AlliedPay.
What are the fees associated with an Internet Merchant Account?
Typical fees may include transaction fees, monthly service fees, chargeback fees, and setup costs. AlliedPay offers transparent pricing with no hidden fees and customized plans for businesses of all sizes.
Can high-risk businesses get an Internet Merchant Account?
Yes, high-risk businesses can still qualify, although they may face higher fees or additional underwriting requirements. AlliedPay specializes in supporting a wide range of industries, including those considered high risk.
Is my customers' payment data secure with an Internet Merchant Account?
Absolutely. AlliedPay’s merchant account services comply with PCI-DSS (Payment Card Industry Data Security Standards) to ensure encrypted, secure transaction processing and protect sensitive payment information.
Can I use my merchant account with multiple websites or platforms?
In many cases, yes. However, you may need to disclose each site during the application process. AlliedPay can help you manage multi-site setups and integrations with various platforms like Shopify, WooCommerce, and custom eCommerce solutions.
They’re a well-run, trustworthy company, and every time I’ve reached out with a question, they’ve been thorough and thoughtful in their responses. You can tell they truly care about supporting their clients.
Our business is often considered “high-risk” by many processors, so finding the right partner can be challenging. These guys made the whole experience smooth, and I feel very confident working with them.
If you’re a business owner looking for a solid, reliable merchant services provider—especially if your needs are a bit more specialized. I highly recommend them.
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