Did you know that global e-commerce sales are expected to reach $6.3 trillion by 2024? As the world of online shopping continues to grow at a rapid pace, having a seamless payment processing system is more important than ever. Whether you’re a small business or a large-scale retailer, choosing the right merchant account can be the difference between smooth transactions and lost sales.
If your checkout process is too complicated or if you experience frequent payment issues, it could lead to shopping cart abandonment—costing your business valuable revenue. So, how do you choose the best merchant account for your e-commerce store? Let’s explore the top options and key features to consider when selecting a payment processor.
What is a Merchant Account?
A merchant account is a type of business bank account that allows businesses to accept payments via credit and debit cards. It acts as an intermediary between the customer’s bank and the business’s bank, ensuring transactions are secure and funds are processed efficiently. For e-commerce businesses, having a reliable merchant account provider is essential for handling online transactions smoothly.
Key Features to Look For in a Merchant Account for E-Commerce
Before we dive into the top merchant account options, here are the key features you should consider:
Low Transaction Fees: Since e-commerce businesses process a high volume of transactions, even a small difference in fees can impact profitability. Look for merchant accounts that offer competitive rates.
Security: Your merchant account provider should comply with PCI-DSS standards, ensuring data protection for your customer’s financial information.
Integration: The best merchant accounts should easily integrate with popular e-commerce platforms like Shopify, WooCommerce, and Magenta to streamline operations.
Chargeback Protection: A good merchant account will offer fraud detection tools and chargeback prevention measures to protect your business from losses.
Global Payments: If you plan to sell internationally, ensure the merchant account can handle multiple currencies and cross-border payments.
Mobile Payment Support: With mobile commerce on the rise, ensure the merchant account supports mobile payments including options like Apply Pay, Google Pay, and other wallet services.
Customer Support: Reliable customer service is crucial to resolving issues that may arise with transactions. Your merchant account provider should be responsive to resolving any transaction issues.
What Are the Types of Merchant Accounts for E-Commerce?
Retail Merchant Accounts: Retail merchant accounts are designed for businesses that primarily process in-person transactions, such as brick-and-mortar stores. However, they can also be used for e-commerce with online payment gateways, though they may not offer as many specialized features for online businesses.
Internet Merchant Accounts: Specifically designed for e-commerce businesses, internet merchant accounts facilitate online transactions through payment gateways. These accounts support payments via credit cards, debit cards, and digital wallets on websites or mobile apps.
High-Risk Merchant Accounts: Some e-commerce businesses fall into the high-risk category due to factors like the industry (e.g., adult content, gambling, or travel), high chargeback rates, or subscription-based services. High-risk merchant accounts are tailored for these businesses, offering additional fraud protection and higher fees to manage risks.
Offshore Merchant Accounts: Offshore merchant accounts are based in foreign countries and are often used by businesses that want to reduce taxes, avoid strict regulations, or process transactions in multiple currencies. While they offer flexibility, they often come with higher fees and increased risk of fraud.
Aggregated Merchant Accounts (Payment Service Providers): With an aggregated merchant account, businesses share a single merchant account provided by a third-party service like PayPal, Stripe, or Square. This is ideal for small e-commerce businesses or startups because there are fewer upfront costs and less stringent requirements. However, shared accounts may offer less control over transactions and higher per-transaction fees.
Dedicated Merchant Accounts: A dedicated merchant account is a unique account for your business, provided by a bank or payment processor. These accounts offer more transaction control, lower processing fees (especially for high-volume businesses), and better customer support. They are ideal for medium to large e-commerce stores with high transaction volumes.
Mobile Merchant Accounts: Mobile merchant accounts are designed for businesses that process payments via mobile devices. These accounts integrate with mobile point-of-sale (mPOS) systems and mobile payment apps like Apple Pay, Google Pay, and Samsung Pay. For e-commerce businesses with a mobile app, this type of merchant account supports seamless mobile transactions.
Subscription-Based Merchant Accounts: This type of merchant account supports recurring billing and automated payments for businesses offering subscription services. It simplifies managing subscriptions by automating the billing process for customers on a weekly, monthly, or yearly basis.
How to Choose the Right E-Commerce Merchant Services Providers in the USA
Assess Your Transaction Volume: Determine how many transactions your business processes monthly. High-volume businesses might benefit from providers with lower per-transaction fees, while smaller businesses may prioritize ease of use and no long-term contracts.
Assess Your Business’s Sales Channels: Consider whether your business operates online only, in-store, or both. Providers like PayPal and Square offer multi-channel solutions, while others may specialize in one.
Global Reach: If you sell internationally, choose a provider that supports multiple currencies and international transactions, such as Stripe or BlueSnap.
Evaluate Transparent Pricing: Look for providers with clear and transparent fee structures. Avoid hidden fees, which could include setup fees, monthly fees, or penalties for early termination.
Interchange-Plus Pricing: This pricing model offers more transparency and may save you money over flat-rate pricing, especially if you process large transaction volumes.
No Hidden Fees: Providers like Fattmerchant and Dharma Merchant Services are known for transparency in pricing, helping businesses avoid unexpected costs.
PCI Compliance: Ensure the provider complies with the Payment Card Industry Data Security Standard (PCI DSS) to protect customer payment data.
Fraud Prevention Tools: Providers like Authorize.Net and Stripe offer advanced fraud detection and prevention features, which can help reduce chargebacks and protect against fraudulent transactions.
Platform Compatibility: Ensure the merchant service provider integrates seamlessly with your e-commerce platform (e.g., Shopify, WooCommerce, or Magento). Providers like Stripe and PayPal have robust API support for custom integration.
Simple Setup: Some providers offer a plug-and-play setup, while others may require more technical expertise to implement. Choose based on your team’s technical capability.
24/7 Availability: Payment issues can happen at any time, so it’s crucial to have access to 24/7 customer support. Look for providers like Square that offer round-the-clock support.
Reputation: Read reviews and testimonials from other businesses that use the service to gauge customer satisfaction and reliability.
Analyze Scalability and Growth Potential: Business Growth: Choose a provider that can grow with your business. A provider like Stripe offers scalability with advanced features such as subscription billing and multi-currency support for growing businesses.
Flexible Payment Methods: Ensure the provider supports a wide range of payment methods, including credit/debit cards, mobile wallets (Apple Pay, Google Pay), and ACH payments.
Review Contracts and Terms: No Long-Term Commitments: Some providers lock you into long-term contracts with penalties for early termination. Companies like PayPal and Square have flexible, month-to-month terms without hefty cancellation fees.
Customization Options: Choose a provider that allows you to scale and customize services as your business needs change, such as adding support for recurring billing or loyalty programs.
Top 10 Companies Providing Outsourcing Services of Merchant Accounts for E-Commerce
Strip:
- Overview: It is known for its easy integration and wide range of features. Stripe is a popular choice for E-commerce businesses of all sizes. It supports multiple currencies and payment methods, including credit cards, debit cards, and digital wallets.
- Key Features:
- Seamless API integration.
- Support for recurring billing and subscription management.
- Advanced security features, including PCI compliance and fraud detection.
PayPal
- Overview: PayPal is one of the most widely recognized and trusted payment processors globally, offering both aggregate merchant accounts and payment gateway services.
- Key Features:
- Easy setup with no monthly fees.
- Support for various payment methods, including PayPal balance, credit cards, and digital wallets.
- Extensive global reach with multi-currency support.
Outsourcing Buddy
- Overview: Originally known for its digital marketing and e-commerce operations solutions, Outsourcing Buddy has expanded into e-commerce with a robust platform. Contact them for more details and discuss plans with them.
- Key Features:
- Offers a wide range of outsourcing solutions.
- Provide services to different industries.
- Support small, medium, and large-sized businesses.
Authorize.Net
- Overview: A veteran in the payment processing industry, Authorize.Net offers a comprehensive suite of tools for eCommerce, including a payment gateway and merchant account.
- Key Features:
- Advanced fraud detection tools.
- Supports various payment methods, including credit cards, e-checks, and digital wallets.
- Extensive developer resources for custom integrations.
Braintree
- Overview: Braintree, a PayPal subsidiary, is known for its flexibility and support for a wide range of payment methods, making it ideal for global eCommerce businesses.
- Key Features:
- Supports a variety of payment options, including credit cards.
- Recurring billing and subscription management.
- Global reach with support for over 130 currencies.
2Checkout (now Verifone)
- Overview: 2Checkout provides a global payment platform that supports over 200 countries, making it a top choice for international eCommerce businesses.
- Key Features:
- Multiple payment methods and currencies are supported.
- Comprehensive fraud protection and chargeback management.
- Easy integration with popular eCommerce platforms.
