Although your business bank seems like the most obvious place to obtain your IMA, it is often worthwhile shopping around with online payment services providers. They usually have relationships with a number of acquiring banking partners that they can leverage in your favour to secure more competitive rates.
The most obvious question to ask is around pricing and rates. Typically, an acquiring bank will charge you a monthly fee for your Merchant ID. You will also pay an acquiring fee, which is a percentage of the transaction value, and a flat authorisation fee per transaction. Additional fees may be levied for refunds and chargebacks. The rates of all fees may vary between credit and debit cards.
If you are a start-up, have no trading history, or the nature of your business is deemed high-risk, your acquiring rates may be higher. If this is the case, ask your internet merchant account provider to review your rates at a 6, 12 or 18 month mark as, if your business is performing well, they may be more inclined to give you more competitive rates.
Terms and conditions of merchant accounts vary. This can affect many factors, from the duration of your contract and frequency of usage to what is shown on your website. If in doubt, contact the merchant account provider for guidance.
The merchant account provider will need to see a range of documents, such as your business registration documents, confirmation of domain ownership and any supplier agreements, in order to ensure that your business is compliant with their requirements. Have the acquiring bank send you a list of documents so that you can compile them in order to speed up the application process.
Settlement terms affect how often funds will be settled from your internet merchant account to your business bank account. Settlement terms can vary from 3 days to 4 weeks. Acquiring banks will often hold funds in your merchant account for a period of time after a transaction has been made if there is a risk of chargeback so it is worthwhile finding out how settlement terms will affect your business model before you apply.
One of the reasons an Internet Merchant Account can be difficult to obtain is the higher potential risk of fraud associated with an online transaction. Card schemes, such as Visa and Mastercard, should be able to provide you with updated security guidelines and minimum requirements for your ecommerce website.
One of the technical requirements of the Visa and Mastercard card schemes is that your payment network is Payment Card Industry Data Security Standard (PCI DSS) compliant. If you are not PCI compliant, the fines that card schemes can levy for a non-compliant merchant are high. If you then experience a security breach on your own systems (where you are maintaining your own payment pages) daily fines can be levied and your ability to process card payments can be removed.
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An Internet Merchant Account (IMA) is a vital component of any e-commerce operation. Businesses wishing to accept payments online must have an IMA if they want to accept card payments via the web.
A Merchant Account differs from your standard business account in that the bank, usually referred to as the acquiring bank, allows card schemes to make payments, chargebacks, refunds and other payment transactions into it.
If you want to process payments online, you will need an Internet Merchant Account (IMA). You can accept online payments into your IMA, process refunds from it to your customers and, by arrangement with your bank, settle funds out of it to your business bank account.