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.

Find a bank to process your online payments

Online payments are processed by acquiring banks. Currently businesses can open a merchant account with the following acquiring banks to receive payments from credit and debit cards:

The acquiring banks

  • Alliance and Leicester

  • American Express

  • Bank of Scotland

  • Barclaycard Merchant Services

  • Diners Club

  • HSBC

  • Lloyds TSB Cardnet

  • NatWest/Royal Bank of Scotland Streamline

  • Ulster Bank

  • The acquiring banks have strict requirements and it's possible that even the bank you use for your business current account may refuse you.
    Once the merchant account has been set up, secure socket layer (SSL) technology is used to encrypt transaction data and to send the necessary customer and credit card details to the acquiring bank in order for the purchase to be authenticated. You should, therefore, ensure that any web hosting solution you are considering is capable of supporting the SSL protocol.


    Checklist: applying for a merchant account
    Banks that offer merchant accounts for accepting card payments have strict requirements. They will want to see:
    your business plan - including details of your cash flow and how you'll promote your online activities
    your website address
    details of your product or service
    your suppliers' details
    how you will deliver your product or service and your terms and conditions for online trading
    your expected average online transaction values and your estimated turnover from online sales
    details of the secure server you'll use
    your audited business accounts
    your bank details and authority to carry out a check with credit reference agencies
    your trading history
    details of the directors or partners in the business - including full contact details
    You should have these details ready before you start the search for a new account.

    WorldPay (Britain)
    UK Merchants can use this program and Worldpay merchant account for payment processing. You require a WorldPay account to link to them using our shopping cart. You can also have the option to process orders via fax and telephone.
    PayPal (USA and International)
    Credit card processing facility for traders without merchant accounts.  Free easy to use online payment solution.  It requires a PayPal Business or Premier Account for this version to work.  Allows online payment with both debit and credit cards.
    UK alternative to traditional merchant accounts. Suitable for small scale transactions. When used with the shopping cart software on this site, Nochex allows small merchants to take payments using Visa, Switch or Solo debit cards.
    FastPay (Britain)
    (Custom cart only).  New payment system from Natwest.  Uses either NatWest own buy now buttons to accept customer orders or as one of the payment options for our shopping cart
    Barclaycard ePDQ (Britain)
    (now only available for custom carts only) If you have a Barclaycard Merchant Services account then you can use ePDQ processing for the shopping cart.  With ePDQ you can accept Visa, MasterCard, Switch and JCB cards on your ebusiness website.