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Learn how to find the best merchant account to launch your eCommerce business, whether you sell subscriptions, retail products, high-risk items, or other goods or services online.
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If you want to sell online, you’ll need an eCommerce merchant account. But with so many choices, how do you decide which is right for your business?
In this post, we’ll review how to accept credit cards online and the features you should look for in your merchant account provider.
Table of Contents
An eCommerce merchant account is a dedicated bank account where funds from your online payments are deposited until they can be transferred to your regular business bank account.
eCommerce merchant accounts include:
You must apply for and be approved for a merchant account. You may get a custom payment processing rate based on your industry, time in business, risk level, and sales volumes, among other factors.
There are some essential eCommerce-related features you’ll want in a payment processor.
An online shopping cart is software that allows customers to view your products and add them to a virtual cart for purchase. Your online shopping cart has to integrate with a payment gateway for customers to be able to securely enter payment information. It also has to integrate with your merchant account so you can transfer their payments to your business bank account.
You can connect your eCommerce merchant account to a popular, secure online shopping cart builder like Shopify or BigCommerce to build an online store and ensure a simple, secure payment process. Alternatively, you can choose a merchant account like Square or Shopify that comes with a built-in online shopping cart for an even more straightforward payment setup.
A payment gateway is a software service that securely uploads a customer’s payment information (credit/debit card numbers, bank account numbers, etc.) after they enter it online, encrypts it for security purposes, and sends it to your payment processor or merchant account for payment approval. If the customer has the funds in their bank account to cover the purchase, the transaction is approved, and the customer’s online checkout is a success.
Payment gateways are required for eCommerce businesses to take payments. Sometimes payment gateways are integrated into an eCommerce service provider’s offering, while other times you can add a third-party payment gateway to your merchant account.
For example, Stripe accounts have the Stripe payment gateway service built in. Dharma Merchant Services, on the other hand, is a full merchant account provider with its own proprietary payment gateway as well as integrations with popular third-party payment gateway services like Authorize.Net.
In addition to helping facilitate online transactions, payment gateways provide security services to protect your customers’ credit card information, databases that can store your customers’ information (name, billing address, credit card numbers, etc.) to make future checkouts faster, and recurring billing functions.
The more alternative payment methods you can accept, the more customers you can accommodate at checkout.
Credit and debit card payments are a given. You may also consider taking Discover and American Express cards, digital wallet payments such as Apple Pay, eCheck/ACH payments, PayPal, and popular international payment methods (if you’re selling in several countries.)
Note: ACH payments are great for billing customers on a recurring schedule since they are automated, reliable, and typically cost less in payment processing fees. We highly recommend building ACH payments into payment pages if you sell subscriptions, services, or memberships. B2B businesses that invoice should also consider implementing ACH payments.
Software integrations connect different products so they can communicate data and reduce the amount of data entry you have to do.
For example, connecting your online shopping cart with your accounting software means you won’t have to repeatedly enter the same data into different software.
Some merchant services providers, like Stripe and PayPal, connect with virtually any cloud-based software available. Other merchant account providers, like Helcim and Host Merchant Services, offer an open API (application program interface) for you to connect your merchant account to any online shopping cart and accounting software.
Note: Working with an API can be difficult. Consider hiring a developer if you’re not very tech-savvy, or choosing a popular payment services provider if you want all your business management systems to work cohesively.
Which eCommerce merchant account you should use depends on factors like your payment processing volumes, your industry, and which software integrations you need, among other considerations.
If you have higher monthly sales volumes, own a business in a high-risk industry, or want to sell globally, consider getting a dedicated merchant account, which is less likely to be frozen, offers better payment processing rates for larger sales volumes, and will, in some cases, process payments for high-risk businesses.
If you’re just starting out with eCommerce, a payment services provider (e.g., Stripe, Square, PayPal, Shopify) might be a more suitable — and more affordable — fit.
Start your search with our picks for the best online payment processors, with options available for low-risk businesses, high-volume sellers, high-risk industries, and more.
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The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.
Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
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