Merchant accounts are special bank accounts set up to receive customer payments usually by credit card. It is often difficult for new online businesses to open a merchant account with a traditional bank. Banks, fearing fraud and other difficulties, are historically reluctant to trust small Internet merchants. In the face of complicated applications, expensive security deposits, and out right refusal many on line stores turn to payment processors like Paypal. Payment processors can be a vital in the beginning for a small business but when a business has grown a little and established some reputation it might be time to reconsider a merchant account. (Editor’s Note: Growing online retail businesses would be well advised to take a look at the many wholesalers offering great deals at Top Ten Wholesale.)Merchants who have enjoyed success with Paypal may wonder why they should tamper with success and take on the headache of processing their own credit card transactions. Despite initial difficulties merchant accounts can offer businesses many advantages.The biggest reason to switch is money. Merchant accounts nearly always have lower per transaction fees than payment processors. Normally a merchant account costs less than 3% of each transaction plus a fee of about 20 cents. You will sometimes encounter merchant accounts offering rates as low as 1.5% but you should be very cautious of such offers. They are usually dishonest attempts to stick you with absurd fees. Speaking of money, merchant accounts will also get yours to you faster than payment processors, normally in about three days.Another reason to consider getting a merchant account is security. A good merchant account comes from a bank. Many customers of Paypal can testify to the difficulties they’ve encountered with the unregulated payment processor. Banks have strict guidelines about how long they can keep your money and under what circumstances. These rules protect the small merchant from arbitrary account freezes and fees. Banks almost always offer more services and account flexibility than payment processors. For example, many merchant accounts will allow your business to accept checks online.If you’re considering opening a merchant account the place to start is your bank. A bank that you have an existing relationship with is more likely open a merchant account without an exorbitant security deposit or application fee. Of course, you should shop around. The fees and requirements for accounts vary from institution to institution. Some providers will ask for an application fee while others will not. When shopping for a merchant account a common trap to watch out for is a minimum transaction fee. Some merchant account providers will charge you a fee if you do not reach a set number of transactions every month. This fee can be quite high and you can probably find a provider that doesn’t have a monthly minimum. You will probably also have to pay a monthly statement fee of about $10 a month.Merchant accounts nearly always enable a merchant to accept Visa and Master Card. If you want to be able to take American Express you will have to set this up independently and pay a slightly higher transaction fee often 3.5%. Discover Cards are similar in that they also must be set up separately but the transaction fees are usually less than American Express.You will have to set up your own shopping cart on your website. This may be a daunting idea to the technically impaired but the software comes with instructions and customer support. The shopping cart software cost about $100. The upside is the opportunity to personalize and add excitement to your electronic storefront.When you consider the savings, security, and flexibility of a merchant account it easy to see why many on line businesses decide the change is worth the effort and initial expense. With an investment of money and the time it takes to learn the software you can improve you business’s profitability and energize your website.Fees You Will Have to Pay