What You Need to Know about Getting an eCommerce Merchant Account

Online shopping is officially in the mainstream. eCommerce spending is on the up globally with sales projected to exceed $5 trillion by the end of 2022. In the US alone, eCommerce sales made up 14.8% of total retail sales in Q3, 2022, as reported by the US Census Bureau.

This means the stakes are higher than ever. Customers want seamless checkout experiences with a wide range of payment options. Future-focused online businesses, therefore, need comprehensive payment solutions to stay ahead of the game.

Setting up an eCommerce merchant account requires commitment. And because change is difficult, choosing the best provider from the very beginning saves you a lot of trouble down the line. Here’s all you need to know about getting an eCommerce merchant account that sets you up for success in 2023.

What is an eCommerce Merchant Account?

eCommerce payments are a little more complicated than in-person payments. Cash is not an option. Smooth, secure payments are paramount. Failure to have everything ready at the point of purchase can mean losing business forever.

eCommerce merchant services are provided by payment processors that accept payments online. eCommerce merchant accounts handle all of the online payment processing functions. They facilitate credit and debit card purchases, enable ACH payments, PayPal, or buy now, pay later.

Behind the scenes, they offer online payment gateways, PCI compliance, integrations, and dashboards. The best eCommerce merchant accounts help online business owners understand their customers.

At its most basic, an eCommerce merchant account enables eCommerce credit card processing. At its most comprehensive, it empowers eCommerce websites to optimize the entire customer experience.

Key eCommerce Payment Processing Features to Look for

Operating a business online requires more than the ability to process payments. Digital businesses have huge benefits by way of integrations and data capture. Both large and small businesses want a provider with services for the digital landscape. This means connecting a payment processing solution with broader eCommerce services.

These are the features to look out for:

1. Payment gateway

Payment gateways may be a new feature for new eCommerce stores. Brick-and-mortar businesses don’t require payment gateways. But no eCommerce site can operate without one.

The payment gateway facilitates the payment. Transactions are sent from the customer to the processing network through the gateway. Purchases are authorized, transaction fees are taken, and the amount goes into the merchant account once complete.

There are essential security features within the payment gateways to store and protect customers’ credit card information. Securely storing that information is important. Smooth processing solutions include quick payments at the checkout—no need to enter card information every time.

Not all merchant accounts come with payment gateways though. Working with one that does makes it easier to get the most from your credit card processor.

2. Multiple payment methods

There are many ways for customers to process transactions online today: credit card transactions, multiple currencies, eChecks, ACH payments from one bank account to another, PayPal gateways, and buy now pay later solutions. All of these payment services are set up through your merchant account provider.

Accepting multiple payment methods matters for modern online stores. Say a customer is browsing online. Most will look for competitive pricing. If the items are the same or similar, buying decisions are going to be made at the checkout. If a customer can’t pay how they like, they already know other online stores where they can.

Diverse payment options keep customers on your site, thus limiting their impulse to shop around.

Merchants need to understand how their customers pay. If the customer base is international, accepting multiple currencies will be important. In other cases, credit card payments could be all that’s required.

Before selecting an account provider, merchants need to understand how their customers pay and make sure that their merchant services provider supports those payment methods. They should also check if the provider has the capability to add on other options as needs change.

3. Online shopping cart

Online shopping carts are not a payment solution, but they help secure payments. Shopping carts help customers to add items, review them, and compare them—all of which improve the shopping experience and lead them closer to the sale.

Why is it an important feature for a payment processor? The shopping cart needs to connect with the payment gateway and the merchant account.

Most sites will have the shopping cart already set up through an eCommerce platform like Shopify. What needs to be assessed is whether the payment processor is compatible with that cart.

Ideally, it’s best to work with a provider that has a range of shopping cart integrations. Flexibility allows businesses to adapt and change without running into system blocks.

4. Simple integrations

Every business today relies on a variety of software solutions to operate efficiently. Leads collected online may feed into a CRM platform. A content management system would help merchants publish updates to the site. Accounting software connects with online sales to simplify financial reports.

Integrations make all of this possible. Some may be native integrations (where the merchant account is already connected to the other system). Others could be through APIs. In this case, a payment processor has the capability to add systems to theirs. Business owners can simply select from thousands of possible integrations, depending on their needs.

The needs of online businesses are regularly changing. A payment processor with more integrations than is needed now allows for other transformation options later.

5. Encryption/Security

When it comes to security, selecting providers is easy. Never work with a platform that does not offer encrypted processing.

Encrypted processing protects customer data. When keying in their information at the virtual terminal, this keeps those details safe.

Choosing the Best eCommerce Payment Provider

If they meet the desired features above, providers should then be analyzed for their services. Contract terms, support, and rates can differ greatly. Check for the following:

1. Credit card processing fees

Processing fees are an unavoidable part of accepting debit and credit card payments. Interchange fees are charged by credit card companies—Visa, Mastercard, American Express, etc. No payment processor can waive these.

On top of the interchange rate, payment processors need to charge fees for their services. How they structure this can work in a few ways.

• Flat-rate pricing: Providers offer a flat rate for all card-based transactions. It sounds convenient, but this can end up being far more expensive than other options.

• Tiered pricing: Different transactions can attract different rates in this structure. How they’re tiered can depend on the provider. This is hard to understand and quite inconvenient for merchants in most cases.

• Interchange-plus pricing: Many providers work in this way. Interchange-plus pricing separates the credit card company fees (mentioned above) from their own service fees. This gives greater transparency. It can be harder to keep track of the pricing due to interchange rate changes, but the processor costs are always clear.

• Membership pricing: This is commonly referred to as wholesale pricing or subscription pricing. For a single monthly fee, you get access to the direct costs of interchange. This helps merchants better forecast pricing. It also favors high-volume sites that would otherwise incur huge bills under interchange-plus or flat-rate pricing.

2. Contract terms and/or hidden fees

This may be obvious but essential. Look out for hidden fees or unclear contract terms. Some providers may lock in merchants on POS systems or charge extra for basic services. Reading reviews online should help identify providers with sneaky practices.

3. Compatibility with the offline business

Businesses processing online and offline sales will need to consider solutions that work in both environments. If the business currently only has an online presence, it’s still worth considering if that may go offline in some cases. Or perhaps the opposite scenario.

Stores already operating offline will likely already have a merchant account. The consideration is then finding out if that provider has compatible shopping cart and gateway solutions. Otherwise, find a provider that can integrate with the existing platform.

When setting up fresh, it’s advisable to find an all-in-one provider that can handle both online and offline payment processing.

4. Access to customer support

Merchants will want to consider the type of support they need before selecting a provider. Many platforms offer live chat, resource hubs, and other cool-sounding features, but human support is the best. What if thousands of dollars are stuck on chargebacks or refunds? Access to phone support will save your sanity.

Also, consider the timezone of the provider’s customer support team. If they’re local, standard office-hour support may be fine. If they’re abroad, consider what that would mean for accessibility.

4 of the Best eCommerce Merchant Services Suppliers

Considering all the criteria listed so far, the most common providers left as prospects would be Payment Depot, Stripe, Square, and Authorize.net.

1. Payment Depot

Payment Depot is an all-in-one merchant services provider for established online and offline businesses. It’s unique in that its processing rates are structured with membership pricing. As discussed above, membership pricing benefits high-volume businesses that can save on per-transaction fees. Forbes gives Payment Depot 4.7 out of 5 stars, citing the transparent pricing structure as a huge pro.

By setting up an account with Payment Depot, merchants get free payment gateways, terminals, and shopping cart integrations. As eCommerce businesses grow, they can access more comprehensive plans. Payment Depot also has innumerable integrations to enhance online business capabilities. All this with zero hidden fees, markups, or contracts. 

2. Stripe

Stripe entered the market specifically focusing on eCommerce merchant services. They have excellent developer tools. Advanced reporting and subscription tools are standard. Then they also handle international currencies.

Within tech-savvy organizations, Stripe is highly praised. However, businesses need in-house technical knowledge to take full advantage of the platform. There’s also not a great deal of flexibility. Their payment gateway, for example, cannot be used independently. Forbes gives the solution 4.4 out of 5 stars, largely for its advanced reporting. However, they note the solution requires a lot of technical understanding.

3. Square

Small in-person businesses love Square for its point-of-sale solutions. Like Stripe, their pricing is flat-rate. This is fine for small businesses, but those with high-volume transactions will pay far too much. Forbes rates them 4.4 out of 5 stars but notes that cons include accounts getting frozen due to irregular activity and that it’s not cost-effective for high-volume sellers.

Square offers free online store and shopping cart support when setting up online. The services are designed to help brick-and-mortar businesses move online or add an online store. Square is a trusted solution for high-risk merchants with low-volume transactions.

4. Authorize.net

Authorize.net is a Visa solution. This gives it unique access to the card brand networks, optimizing its response times and data security. Like Square and Stripe, it uses flat-rate pricing, making it quite costly for high-volume transactions. Forbes does not appear to have rated this solution, but users give it 4.4 out of 5 stars on GetApp, a consumer reviews site.

The benefits of Authorize.net are security. It has advanced fraud detection and secure customer data storage. But this can be enjoyed by just using Authorize.net as a payment gateway. Low-volume transaction businesses may find value in Authorize.net as an all-in-one platform. For high-volume transaction businesses that want Authorize.net, it’s better to just use the payment gateway with a provider like Payment Depot.

Build for the Future 

Whether moving online or switching providers, the best merchant services account will grow with you. High-risk, low-volume businesses may not have too many options in the beginning. Once established, membership-based pricing is the best. 

You want an all-in-one provider that offers huge functionality through integrations but does not lock you into lengthy contracts or charge a host of hidden fees or high markups.