Setting up an eCommerce SiteMore and more businesses these days are expanding their customer base by going online. If you’re thinking of doing the same, you’ll need three things: a shopping cart, a merchant account and a payment gateway.

A shopping cart is software that will let your customers browse through and select items from your shop and take them to the checkout page. You can either build a shopping cart from scratch or choose from a wide range available on the market.

This guide, however, will focus on the other two elements of building an online shop or eCommerce site, as choosing and setting them up can be a bit trickier.

What is a Merchant Account?

A merchant account is a special type of bank account that lets you accept debit and credit card payments. A merchant account ensures your and your customers’ security by providing a rigorous verification and authorisation system for every time a card transaction is made in your shop.

Keep in mind that a merchant account is not the same as a business bank account as you won’t have direct access to deposit or withdraw funds from your merchant account.

You do have to have a business bank account in order to qualify for a merchant account, as the processed funds from successful card transactions will be paid into your business bank account.

Another thing to keep in mind is that if you sell your products or services in a bricks-and-mortar shop and online, you’ll have to get a separate merchant account for each. Your online merchant account is called an internet merchant account (IMA).

Because online card transactions are more prone to fraud and security breaches, the regulations over these are a lot tighter and applying for an IMA can be a long and tedious process.

How to Set Up a Merchant Account

There are two ways to get a merchant account—directly through a bank or through an independent sales organisation (ISO). Most high street banks can act as merchant or acquiring banks, but are known to have more stringent rules for applicants and charge higher fees.

ISOs, on the other hand, are considered to be friendlier to new and/or small businesses and often waive some of the fees charged by high street banks.

Whichever route you take, the merchant account provider will do a review of your business to make sure that your business is worth the risks they will be taking.

To apply for a merchant account, you’ll need certain documents that will show your business viability, expected revenue and your credit history. Most providers will ask for the following if you’re applying for an IMA:

  • Business bank account details
  • Your trading history, if applicable
  • Details of your website
  • Description of your goods or services
  • A detailed business plan
  • Your delivery process
  • Your expected revenue and transaction volume
  • Your online terms and conditions
  • Secure server details
  • Your suppliers’ details

Some providers will ask you to apply in person, while others are happy with online applications. Whichever the case, make sure you have all your documents on hand to make the process as quick and easy as possible.

It will take between one and four weeks for your merchant account application to be approved. Once it is approved, you will get a unique merchant ID (MID) from your provider along with instructions on how to integrate it into your shopping cart.

What is a Payment Gateway?

Now that you have your merchant account, you can get a payment gateway. A payment gateway is an online system that facilitates the secure transfer of a customer’s card details to the right channels for verification and authorisation of the customer’s card payment.

The payment gateway allows for real-time processing of credit or debit card payments online, and lets the customer and the merchant know if a payment has been authorised or declined by the customer’s card issuer.

How to Set Up a Payment Gateway

You can get a payment gateway from a payment service provider (PSP). Many banks and ISOs have their own PSPs and offer a merchant account and a payment gateway as a bundle, but there is no obligation for you to use the same provider for your merchant account and your payment gateway. In fact, many third-party PSPs are worth looking into because of their versatility.

When deciding on which payment gateway to use, look for one that is reliable (with at least 99% uptime), secure, PCI DSS compliant and has an online reporting system that allows you to access your account anytime, anywhere.

Look into the costs as well. There are many PSPs that offer payment gateways with a monthly fee of about £20-£30, but might charge you more if the number of transactions on your shop exceed the set limit.

Another thing to check is that the payment gateway is compatible with your shopping cart so they can integrate seamlessly. You can do the integration yourself if you have the technical know-how, or you can ask the PSP to host the payment page.

With the latter option, your customers will be taken out of your website and onto a separate payment page during the checkout process.


Author - Nigel Vaughan

Nigel has over 10 years experience in digital marketing, and loves tech and all kinds of electronics. A keen cyclist and cycle-tourist, he has cycled through 25 countries worldwide.