Business Ecommerce Technology

Finding the Best eCommerce Merchant Processor

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Congratulations! Your e-commerce store is set up and on its way to becoming a sales powerhouse. Now that your products and services are on the online space, you need to establish a payment method (Visa and MasterCard), and apply for an e-commerce merchant account. But with the tons of merchant account processors available today, which should you choose? Before choosing a merchant account service, here is a detailed how-to guide designed to help you settle for only the best processor for your business.

Finding the best merchant account processor for your business can be a hassle. You will likely feel frustrated and overwhelmed by the number of available options, especially as the merchant service industry is notorious for expensive contracts, hidden charges, and unethical practices. Finding a provider that fits your needs can take many hours of research, and with other important matters on your plate, you may be tempted to settle with a company that offers the lowest rate. Do not make this mistake. Choosing a merchant account processor based on their rates alone can negatively affect your business.

Here are the top-ten most important considerations when choosing a merchant account processor for your e-commerce business.

Understand & Compare Rate Structures 

Choosing an eCommerce merchant account processor based on their rate quotes alone can negatively affect your business, so it would be wise not to allow price be a major decision making factor. However, considering the rate quotes of a merchant provider will also help you avoid working with overpriced services. After all, money matters to every organization, every business.

Look out for processors with fixed and attractive transaction fees. Most merchant account processors offer one or more of the three pricing models: flat-rate pricing, tiered pricing, and interchange-plus pricing.

Tiered Pricing – Although tiered pricing is the most common model today, industry experts criticize it for a lack of transparency. Also known as bucket or bundled pricing for its attempt to bundle interchange rates, this model in which tiers are sorted as qualified, mid-qualified, and non-qualified, has separate tiers for transactions concerning debit and credit cards.

The low teaser rates offered by many merchant providers typically fall under qualified debit transactions, and they apply to only regular debit cards that you can accept in person while using a card reader. Mid-qualified transactions are often reward cards while non-qualified transactions are usually business or foreign cards. However, some non-qualified transactions may include premium reward cards. Most merchant account processors offer three transaction tiers, while others may offer as few as two or as many as six tiers.

If a merchant service quotes tiered rates, it would be wise to ask how many tiers they offer and which type of cards and payment methods apply to each tier. It is also important to know the type of card most of your customers use as this will help you determine whether this pricing model is cost-effective for your business. If most of your customers use regular debit cards for their transaction and you accept cards in person, tiered pricing may be ideal for your business.

Flat-rate Pricing – This simple pricing model charges a single, fixed percentage for each transaction, though fees may apply per transaction. It is popular among mobile merchant account processors, and may represent a cost-effective option for small businesses that process less than $3,000 monthly or those that have small tickets.

Interchange-plus Pricing – Also known as cost-plus pricing or interchange-pass-through pricing, this model is made up of three parts: the processor’s mark-up, the card-brand fee, and the interchange rate. The card-brand fee and interchange rate are fixed transaction rates established by card payment networks (Visa and MasterCard) to ensure everyone pays a fixed amount.

Each merchant account processor now adds a per-transaction fee and percentage markup to the standard fees. Industry experts recommend this pricing model as the markup is negotiable and it allows you see the fees you pay above the standard rates.

Transparency is a very important factor for whatever pricing model a merchant works with. As such, it is ideal that you not only understand a merchant’s pricing model, but are able to determine their rates for the complete transaction process – and ensure it is affordable enough for your business.

Analyze Total Overall eCommerce Processing Cost

Some merchant account processors charge set-up fees and monthly fees to cover expenses for things like support and PCI compliance/security. Some providers even have account cancellation fees and this can be costly if you decide to work with another provider. How much would it cost to set up a merchant account and would it have to be paid upfront? Are there any additional fees to be paid monthly or annually? How much would you be charged for every bank wire and statement? What are the chargeback, refund and retrieval fees like? These questions will help you select a merchant account processor that offers not only attractive rates, but one with a stable pricing structure.

Determine Total eCommerce Gateway Cost

eCommerce Gateways are the connection between your eCommerce Shopping Cart and your merchant account processor. These secure gateways transmit transaction data from your website shopping cart to the processor and then the transaction is either “Approved” or “Declined”. These gateways have several layers of data protection and are certified by Visa and Mastercard for data security. was one of the first to market and by far the most popular today. These third-pay gateways have both monthly and per transaction costs, which should be calculated into your overall ecommerce processing costs.

Determine Your Chances of Merchant Approval

If your business is in a high risk industry, getting your merchant account approved will likely be more difficult. However, so long as you are honest and transparent throughout the course of the application process, you should still be able to get your account approved. Banks and payment providers dislike chargebacks. If you have a history of high chargebacks, your financial service provider will want to know the steps you are taking to alleviate this. Since different merchant account processors have different terms for both low risk and high risk companies, it would be wise to determine your chances of getting your merchant account approved, before going through with the application process.

Be Sure You Can Work With the Merchant Processor

A mindset can spell the difference between success and failure in business. A negative mindset tends to limit or undervalue achievements or generate different negative feelings. On the other hand, a positive mindset can help you have a better and more productive result. And even when setbacks arise, you will be well equipped to push through and move forward. Be positive you can work with the merchant account company.

Check Processors BBB Ratings and Scam Alerts

Do not be left out in the dark. You can improve your decision-making ability by checking out customer business reviews, complaints, and scam alerts. BBB helps you track any compromising reports about any merchant account processor – and any business – so you can make informed decisions when choosing a merchant service for your business.

Ask if They Charge a Termination Fee

Does your preferred merchant account processor charge a termination fee? Truth is, many business owners do not know and, to be fair, it is not entirely your fault. Merchant account companies are out to make money, so many of them would never want to ruin a potential deal by talking about a termination fee before a deal is closed. In fact, they will do whatever it takes to avoid the topic entirely. Hence, it is not ideal to assume that a termination fee does not exist simply because your account processor didn’t say anything about it. The only way to be sure is to ask.

Read the Terms of Contract

There is a difference between the application documents and the terms of contract. In addition to going through the application documents, reading the terms of contract will help you avoid any pitfalls. Do not just take time to ask questions concerning the agreement – read it yourself. That way, you will be better able to shop for a merchant account processor that is suitable for your business. Reading an entire contract is boring, but unpleasant surprises are also never ideal for a business.

Make Sure You Will Have 24/7 Support

Anything can happen. You can never tell when a little problem or a large crises will occur. Uninterrupted cash flow is crucial to the survival of your business, so you want to ensure you have someone to turn to at any time. Remember that you are managing a business, and any interruptions or downtimes can mean reduced cash inflow for you and your business. You should ensure that you not only have access to 24/7 support, but such that it is fast and responsive.

Keep Your Account in Good Standing

Keeping your merchant account in good standing means that you continue to make the minimum agreed payment when your billing is due. Mitigate and prevent chargebacks, as excessive chargebacks will quickly get your account closed. If you have exceeded your credit limit, your account may also be regarded as out-of-good-standing. It is important to note, however, that there is no cast-in-stone standard for the definition of this term. However, by ensuring you meet minimum payments by when your billing date is due, you will be better able to keep your account in good standing.

Closing Thoughts

The merchant account industry is filled with services employing deceptive marketing tactics to attract clients. It would be wise to understand these tactics so you can choose the right provider and grow your business. The best merchant account processors will not only provide affordable services, but support transparent pricing options, helping you make more informed decisions. They will also support the latest payment technologies, and ensure you are not locked into lengthy contracts, but valuable monthly services.

About the author


Mark Sands

Mark Sands is founder of HRMA-LLC, a leader in the payment processing space. We have distinguished ourselves as an industry leader, providing unsurpassed customer satisfaction. Our experienced team has decades of experience, combined with a passion for providing the highest level of customer satisfaction, unparalleled within our industry. Visit us today at