Online shopping has been growing steadily year over year for many reasons. Consumers have greater access to affordable devices. More people have computers in the home than ever before. Mobile users are increasing as the next generation ages into the marketplace. Consumers are also becoming used to the convenience. Businesses watching these trends may have wanted to jump on the bandwagon, open an eCommerce store, and accept credit payments cards online. And then Covid-19 hit and changed everything.
Predictions initially put global eCommerce sales at $4.88 trillion by 2021. More than half (53.9%) of those sales were expected to be generated through mobile devices. But they made all those predictions before Covid-19 changed the way we do everything.
Before, less than half of the small businesses in America had a website. If you didn't provide consumers with the option to make online purchases, you were just missing out. Now, merchants have been pushed into rethinking how they do business.
Many retail stores have added online sales with great success. Current eCommerce stores are experiencing higher conversion rates and a significant dip in shopping cart abandonment. As of June 2020, online sales growth was up 76% year over year when compared with June 2019. Even the Average Order Value (AOV) has spiked, increasing from $129 in December 2019 to over $248 in March 2020.
It's a great time to be in eCommerce, but before you get started, there are a few things you need to know.
Did you know eCommerce merchant accounts are considered high-risk?
eCommerce merchant accounts are considered more of a risk than retail merchant accounts. That's because when merchants accept payments online, it is without the customer or the payment card present. When transactions are performed without the physical card, there can be a higher incidence of fraud. ECommerce stores can also have a higher number of chargebacks. More fraud and high chargebacks bring more significant risk to the payment processing bank.
Because of this, banks and processors label eCommerce stores as “high-risk” merchants. And High-Risk merchant accounts have stricter underwriting and more expensive rates.
If you have to pay more for your processing, then it's essential to make sure you're getting a competitive rate. Interchange Plus pricing is largely considered the most transparent pricing structure in the industry. Why do we say Interchange Plus is "transparent"? Because this pricing structure can't include any deceptive numbers, or hidden merchant services fees. That means rates and fees are all openly disclosed to the merchant looking to accept credit card payments online.
With Interchange Plus, a fixed percentage is added to published VS & MC interchange tables. The interchange tables are considered the base cost, or wholesale processing fees. They are the same for everyone, and they're non-negotiable. With this pricing structure, the base or “wholesale” processing fees are separated from the processor’s mark-up. This makes it easier for merchants to see what they're being charged by the processor above the base rates.
To accept credit card payments online, you need an eCommerce merchant account.
In order to accept payments online, there are a few things you must have in place to be ready.
First, you need a website to sell your goods. Then you need an experienced payment service provider to open an eCommerce merchant account to process online payments through. And you must integrate a payment gateway that will enable you to accept card-not-present transactions.
Let’s talk about website requirements for an eCommerce merchant account.
There are a few things an eCommerce website must have in place in order to get approved for an eCommerce merchant account. All credit card processors require merchants to clearly display three specific things on their website for their customers.
Your website must have:
- Customer service contact information
- Clearly outlined shipping policies
- A clear return policy.
The bank would like to see a phone number for customer service on all pages of the website. If you do not provide customer service by phone, they’ll require at least two alternate forms of contact information. Your shipping policy should include such information as packing and shipping time frames, basic costs, and how you ship. And finally, the return/refund policy should be clear, consumer-friendly, and quickly found on your site.
While the processor requires these things, they’re also just good business practices.
Tips for opening an eCommerce merchant account
Your merchant account is a type of business bank account that allows you to accept credit card payments. Merchant accounts are not all created equal. When you're selling things over the World Wide Web, you have different needs than most retail merchants. You will probably be selling your items internationally. Your merchant account will need to be able to accept payment in multiple currencies. Make sure both the gateway and processor support dynamic currency exchange.
Choose A Payment Gateway
Adding a payment gateway to your website is a pretty straightforward task. The best gateways will integrate seamlessly with your website. Picking out the best gateway depends on specific elements of your business. The gateway you choose will depend on your industry, your current shopping cart, whether you’re selling internationally (or want to in the future). some business types will require the merchant to opt for a high-risk payment gateway.
Your payment gateway connects your web store to your merchant account and allows the card-not-present payment transaction to be processed. The gateway securely captures, encrypts, and communicates the customer's payment card information to the processor. Some gateways include security features such as fraud detection software, can monitor for suspicious activity, and send activity alerts.
Depending on the specific needs of your business, add-ons can be included to customize your merchant account. You can customize your merchant account with Payment Plug-in modules, a Virtual Terminal, Fraud prevention modules, and Chargeback Management software.
Choose the best merchant service provider (MSP) for your eCommerce merchant account.
It's important to partner with a provider that has experience and integrity. Credit card processing fees can be one of the highest fixed costs a merchant has. The viability of your business depends on the solution they establish for you. It must be reliable and affordable to be a sustainable payment processing solution.
You want a merchant service provider that has strong banking relationships with both domestic and international acquiring banks. In order to have a reliable merchant account, you want to partner with a provider that has the experience to place you with the right solutions. The last thing you need is to get your merchant account shut down because the processor prohibits your products or services.
You will also want an MSP who will be with you for the long haul. A reputable merchant service provider will take pride in their customer service. You should have a dedicated account advisor that you can reach anytime you have issues or just need questions answered. They should also offer 24/7 domestic customer service for after hours. It never fails that payment issues happen at the least opportune times!
If you're looking for an eCommerce merchant account with an MSP that is experienced and reputable, look no further. At Bankcard International Group, we understand that it's not how big you are; it’s how BIG you are with your credit card processor!
Put the power of B.I.G to work for your business!