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An online merchant account is a business with an internet presence that accepts payments electronically.

If any business has an online merchant account they will need to have a system in place that will process various credit or debit card payments as well as online bank transfers.

This is a common account that accepts the payment from the customer and passes it on to the merchant’s bank account. This system is referred to as an “Automated Clearing House”.

An ACH is an institution that facilitates or assists in the transfer of funds from one financial institution to another. For instance, if you submit a check from another bank to your bank for payment, the check will go to the Clearing house in the area.

This intermediary body will authorize the payment that will be transfered to your bank account. It cuts out the hassle of you having to go to the bank whose check you have to get your cash.

Similarly, an ACH assists online merchant accounts to receive payments from any payment processing service such as VISA or MasterCard, even various online banks.

An ACH acts as the link between his bank and the online merchant bank account, to facilitate the transfer of funds. Whenever a customer authorizes payment through an online process, such as a credit card or any electronic means, the ACH ensures that the payment is validated and that the merchant will receive his payment in due course.

Many online merchants have chosen to use free online payment processors to cut on costs of setting up their own payment gateways. Though the process is free, the payment transactions still have to go through the ACH in order for the merchant to receive his payment.

This is a very secure way of transacting online and is catching on very fast. In fact, accepting payments online is as easy as accepting cash over the counter, only this way the merchant does not have to go to the bank to deposit the money, the ACH does it for him.

With more and more people coming online everyday, I’m surprised to see so few local businesses benefiting from this trend. What I mean is that very few businesses in my area, the East Bay, have implemented an online payment system.

What better way to sell more of your product and/or service than capturing payments online? Just to give you a perspective, the internet is drawing in 1,000,000 new people every 100 days. These people are coming online by many different means, but mostly via new email accounts and searching for information online. In fact, about 80% of all online sales begin with people starting out with a simple web search for information.

It’d be a shame if they searched for and found your business online but weren’t able to buy from you because your website does not have an online payment portal.

You don’t know how to start transacting online? No worries. Technology has advanced with such a rapid pace in the past ten years that electronic payments have become the norm of the day. More than 40% of payments are transacted electronically through credit and debit cards, apart from the usual wire transfers and online payment portals. In short, it’s easier now than it was just a few years ago. So now, it’s possible for a small business to advertise, sell and collect payments online without ever having to meet the customer personally. Although, you should communicate regularly with your customers.

With these advancements and most businesses adapting their payment procedures and policies to suit customer’s conveniences, I’d also advise that any East Bay business set up an online merchant account with a payment processor in order to cash in on the business that is being transacted on the internet.

There are many online merchant solution providers out there. Many have established themselves in the field setting up and maintaining online merchant software and products that protect against fraud.

So get yourself an online merchant account and get a piece of the action that your competitors will otherwise get.

Once you have your business plan and strategy in place you may have to get a programmer to make customized payment software that will enable you to process online payments.

If you have all this in place you will need to contact an “Acquiring bank” to complete the infrastructure. The problem is that you will have to confirm to a strict list of preconditions the banks lay down in order for a business to qualify for their online services.

It is possible that the bank you have your corporate account with may just refuse you access to their online payment services. The checklist of preconditions is sometimes endless and you will do well to ensure you satisfy all the requirements before applying to any bank.

You will need to provide the bank with details that include: the nature of your business, where you expect the cash to flow in from, explain the details of all your products and services, assure the bank that you will deliver the products and services, explain your terms and conditions for online transactions, give a detailed estimate of your turnover, how many credit card or debit card transactions you are expecting,

** See how difficult it becomes **

You will also need to give the bank details of the secure server you intend to use, and if you do not own it you are likely to be turned down. The list goes on an on.

In the end, many online merchants choose to set up an online merchant account with a third party service provider. This is invariably free to set up and with the least trouble.

Setting up your site to accept online payments is in fact, easier and faster using free payment processors than it is applying to a bank.