According to Visa and Forrester Research, online commerce grew at an annual rate of more than 50 percent for a decade and continues to rise even when the economy shrinks. Accepting credit cards is an essential part of running most online businesses.

Merchant Accounts

There is no Visa or MasterCard website where merchants can apply to take online payments. All credit card processing, online and off, runs first through a bank and then the private networks that connect banks. An account called a merchant account allows businesses to accept credit card deposits. Many banks offer merchant accounts, from national giants to your corner branch.

A Piece of the Pie

Moving money costs money, and that means businesses may only collect 98 cents for every dollar charged on a credit card. Banks charge merchants a fee for processing each transaction. The fee is set by the bank that opens a merchant account and is usually between 1.5 percent and 3 percent for Visa and MasterCard but can be up to 5 percent for American Express.

Special Software

Some banks will provide simple accounts where you type in a few charges by hand every day. Busy e-commerce sites need automated programs to handle many charges a day through payment gateway software. Banks use different gateways so an online business needs to check with its own bank for what software to use.

Getting Started

Small merchants can get started with Google Checkout, PayPal, Yahoo! Small Business, Amazon Marketplace or other providers. Banks are more willing to open merchant accounts for established businesses with good credit. Starting a new e-commerce business can be much faster with a big partner.

Fraud Detection

Credit cards protect cardholders from fraud by allowing them to dispute charges. If the bank enters a chargeback against the merchant, a business may have to pay a fee above just refunding the original charge. The main fraud detection systems are AVS, the Address Verification System, which checks the billing address against the delivery address, and CCV, Credit Card Verification, which checks the three- or four-digit code on the back of credit cards. Businesses in industries with more fraud than average may want to ask their banks about even more protection.

Source:

BizReport.com: Forrester: Growth forecast for 2009 online retail sales

Visa.com: Visa's advice about accepting cards online

Americanexpress.com: The American Express pages about accepting their cards

More Information:

Forrester: E-commerce analyst articles

Yahoo Merchant Solutions