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Setting up a merchant account

To accept credit or debit card payments directly online, you'll have to set up a merchant account.

There are nine banks that currently offer merchant accounts These are referred to as merchant acquirers or acquiring banks

Even if you already have a merchant account for face-to-face transac­ti­ons, you will still need one specifically to accept online payments.

Card users will make payments into your merchant account and the funds will usually be available after three or four working days.

Beware of fraud

Online card payments are classed as "cardholder-not-present" tran­sac­ti­ons, because you can't physically check the card. If a transaction proves to be fraudulent, the money will be reclaimed from your merchant account. Even if a "cardholder-not-present" transaction is authorised by the cardholder's bank, this doesn't necessarily guarantee payment.

The costs

Acquiring banks will charge for their services. There may be a signing-up fee of around £200, and day-to-day charges may be a fixed fee or a percentage of each transaction.

Credit card payments may attract a commission fee, while there are often fixed fees on debit card transac­ti­ons.

If you don't meet the requirements for a merchant account, or it's not cost-effective for your business, you can consider using an online payment-processing company or an online shopping mall to handle card payments for you.