To take payments online you need an internet merchant account (IMA), which is a special type of bank account for accepting card payments online, as well a payment gateway. IMAs can be obtained directly from acquiring banks or included with an all-in-one bureau service.
A merchant account, internet or not, is basically a line of credit rather than a bank account. The acquiring bank takes on the risk of potential non-payment of the outstanding amount when the card bill is due to be settled – or in the event of goods not being dispatched or returned (or a similar dispute arising which results in non-payment or refund).
If you already have a conventional merchant account service with your bank, then you could get an IMA fairly quickly. The bank will provide you with a unique merchant ID number (known as an MID) and that allows you to be recognised when you request money from a customer debit or credit card.
The benefits of internet merchant accounts:
There are two options
Depending on whether you are a new business with little trading history or established, whether your business plan is detailed and structured or whether convenience and simplicity is more important than a cost saving – there are two ways of getting your internet merchant account:
Option 1 – from an acquiring bank
Apply for one directly through your bank, or other high street bank. If you choose to apply for an IMA directly through a high street bank, you will need a payment gateway. A payment gateway securely handles the processing between the shopping cart, credit card company and ultimately the internet merchant account that receives the funds.
You might find that the traditional high street banks are fairly risk-averse to small businesses requesting this service and do not always have experts readily available to talk you through the process.
Option 2 – from a payment service provide
Alternatively, you can apply for an IMA through an independent payment service provider (PSP), like PayPal, SagePay or Realex Payments as part of a full online payments solution.
In both cases, the provider will assess your application business plan, evaluating any potential risks before approving you for an IMA. When starting up an IMA, you will need to be able to pay regular authorisation fees – as well as deductions that cover the risks of accepting online card payments.
View our list of UK acquiring banks
It should be pointed out, however, that acquiring banks have very strict criteria for accepting applications for IMAs. In order to get an IMA you could be asked to provide some or all of the following information:
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