Internet Merchant Account for e-commerce

An Internet Merchant Account (IMA) allows you to accept debit/credit card payments directly to your business bank account, online, with an e-commerce website.

Most business banks offer IMAs. These "Merchant Acquirers" or "Acquiring Banks" can provide you with an IMA once you have been approved.

If you already make face-to-face transactions using a card terminal and a merchant account, you will still need an IMA to collect payments via your website.

It normally takes between three and four working days for payments to arrive in your bank account following a transaction on your e-commerce website.

However because online payments are classified (like over-the-phone payments) as "Card Not Present" you are at risk of a chargeback in the event of a transaction being made that was not authorised by the card holder.

Chargebacks:

A chargeback occurs when a fraudulent transaction is made, and the cardholders' bank reclaims the money from your bank account.

In order to protect yourself from chargebacks, "Mastercard Securecode" and "Verified By Visa" are two schemes operated by online payment card processors.

Costs:

Your bank will charge you for the IMA. Typically there is a c. £200 setup fee, with debit card payments incurring a fixed per-transaction fee, and credit cards incurring a fee based on a percentage of the transaction. There may also be additional fees where a payment service provider is used.

Approval:

To be approved for an IMA, you must meet specific requirements. If you fall short of these requiremnts, or trading online is deemed to be of liablility to your bank, they may request that you put financial guarantees in place. The bank will ask you for a great deal of company and financial information in order to assess your application:

Internet merchant account application checklist:

If you are thinking of applying for an IMA, the following is a checklist of the information that is likely to be requested by your bank.

To apply for an internet merchant account, your chosen bank will have very strict requirements, therefore the bank is likely to want to know the following details about your business:

Your business plan - at least an outline of your business plan, as well as cash-flow information and your online business will be promoted

Your website address - the current address of the website you are planning to use for e-commerce

Products/services offered - you will need to provide full details of what you intend to sell

Supplier info - you will need to provide your suppliers' details to the bank for products/services you intend to sell online

Delivery information - you will need to explain how you will deliver the products or services purchased online

Terms and conditions - you must detail your terms and conditions of online trading, often including a privacy policy and returns policy

Online sales forecast - predict the average online transaction values you expect, the estimated turnover for online sales and the anticipated number of credit/debit card transactions

Secure hosting and SSL Certificate - you must give details of the secure server and security certificates you intend to use

Previous accounts - your bank will want to see your audited business accounts

Bank account details - you will often need to supply your bank details authorise the bank to carry out credit check

Trading history - the bank will use details of your trading history to assess the risk you pose

Directorship information - you will be asked for information about the directors, company secretary and any partners involved with the business

Alternatives:

In the event that you are not approved for an IMA, or the guarantees requested by the bank are not financially viable, then alternatives such as a Payment Service Provider (PSP) offer a solution that while incurring higher transactional fees, provide you with an equivalent service.

Support:

We support all the major banks who issue IMAs (as well as the top payment service providers). If you intend to use one of the following, we can support you:

• Alliance and Leicester
• Bank of Scotland
• Barclaycard Business
• HSBC
• Lloyds TSB
• NatWest/Royal Bank of Scotland (RBS)
• Ulster Bank

For more information on applying for an internet merchant account, contact us for more information.