Internet Merchant Account Gateways 101

When setting up an ecommerce merchant account or when accepting credit cards online, you usually have two components, the merchant account itself and what's called a "gateway account". If you have done any research into this topic, you'll probably have heard of a few different gateway companies. This article is about the gateway account and how that relates to the internet merchant account.

If you haven't heard specifically about a gateway account, you can think of it as a credit card terminal, but instead of a physical machine, it's a program that resides on a webserver. The gateway basically gets the transaction information from your customer to the merchant account bank for processing. It handles the sending and receiving of the financial information including the credit card information and billing information and the subsequent receipt of the approval or denial codes that the bank sends back based on the credit card information.

One of the features of a gateway company is the ability of the merchant to run transactions manually assuming a phone / fax or even a "live" transaction needs to take place before a product or service can be delivered. The virtual terminal is usually accessed via the login to the gateway and an easy link is there to allow the owner to input the credit card information and the billing information as well to process the transaction.

The fees associated with the gateway account are usually based on three components, the setup, the monthly fee, and a per transaction fee. Expect to pay around $25 to $150 for the setup, $5 to $15 for the monthly and anywhere from $.00 to $.10 per transaction for the gateway service. Keep in mind that these fees are usually above and beyond what the merchant account provider will charge you for the merchant account processing fees. Depending on who you use for your merchant account provider, you can usually get a very competitive rate and pricing that includes bundled fees to where your total monthly fee is less than $25 (which is about what the Paypal professional account costs). With this "real" merchant account, you'll usually be lower on your processing fees as well.

As there are several different "layers" of credit card processing and several entities involved in the process, I'll keep this simple. Most gateway accounts are compatible with only certain payment platforms. There are several larger payment platforms in the US for which most gateways are "certified" or able to send transaction information to. If the gateway is being advertised by the merchant account company you've selected, you shouldn't have any problems getting setup and won't even need to worry about the payment platforms. However, if you are using a lesser known gateway provider that is only certified with certain types of payment platforms, you may need to double check with your merchant account that they can setup accounts on a compatible platform. Again, this doesn't affect most merchants and unless you are using a custom coded solution, you're very likely to end up with a competitive gateway that will be very compatible with any merchant account provider out there (such as Authorize.Net).

Another benefit to the gateway account is that some have the option of getting setup with a retail swipe with a USB attachment. This is great if you have your account priced as a retail account and will be using it for at least 30-40% of your transactions in person (whether a retail setup, storefront, or a trade show, etc). What this allows you to do is swipe the transactions and get a lower rate for those because they are considered less risk as the card is physically present at the time of the transaction. This isn't used too often, but may be a source of saving a significant amount of money if you choose to use it.

Some payment platforms will allow you to submit transactions directly from your website or web server to the gateway. This would mean that the code on your website itself would be acting in much the same way the gateway acts. This does typically require some expertise in custom coding a website and shopping cart. If your business processes a lot of transactions, and I mean a lot, then this may be a solution that you should look into. You'll also want to check with your payment processor on this fact as well. They should be able to tell you if this is even possible for you based on the payment platform they've setup your account with.

Getting setup with an internet merchant account typically includes the gateway account as well. The main concerns that you may have is which gateways are compatible with your shopping cart. If you can narrow down this list to your top 2 or 3 gateways, you'll know where to begin your research to compare gateways both cost and features / benefits. If you have questions, you should also have some method in place to contact your internet merchant account provider to ask him or her about your options. This is a relatively easy part of getting setup and should be very straightforward. Good luck in your efforts and best wishes with the success of your business.