Mail order merchant accounts: What they are, how they work

Mail order merchant accounts: What they are, how they work

To sell by mail order today, you must have a mail order merchant account that meets the payment desires of an array of customers. They may choose the postal service, the telephone, the fax or the Internet.

A technologically advanced mail order merchant account system no longer is just a nicety for a business owner. It's a virtual necessity.

Among many providers that stand ready to sell you a mail order merchant account system, one asserts that you could lose more than half of your potential sales if you don't accept electronic payment transactions by telephone rather than by the postal system. This involves not only credit cards, but also debit cards and gift cards and checks.

Regardless of whether "more than half" is a stretch, common sense will indicate that a whole lot of people no longer want to send a check or money order through the mail. Even if your business is the most old-time mom-and-pop type of enterprise, you probably need a mail order merchant account system that's fit for the 21st century.

It's all about convenience. Since you already have chosen mail order as a key -- or, perhaps, only -- element of your business, you have established that direct "personal service" is not your emphasis, at least not in terms of eye contact. Instead, you are emphasizing "convenient service."

Customer's always right, for payment choice
Convenient means versatile. Somebody still might want to send you a check. Make it simple. Somebody else might want to use the telephone. Hook them up, either into an answering system or a fax system. A third person might want to go online. Meet them on their terms.

That's a lot on your shoulders as the business owner in today's world of credit cards, debit cards and gift cards. Besides that, you'll probably have to pay a service provider at least 2 percent of sales, plus a few cents per transaction. That means you give up between 2 percent and 3 percent, compared to if the customer had entered your establishment and had paid cash.

Mail order merchant account provider should earn its pay
What type of equipment will you get in your mail order merchant account system, in exchange for allowing the provider to share in your (fingers crossed) profits? Don't worry, you won't need to clear out a big area. You probably can use your personal computer or lease a so-called virtual terminal or point-of-sale (POS) terminal.

Learn what you can regarding a mail order merchant account system, but don't feel like you need to be an expert. That's why you will pay a provider. In return, you should expect features such as payment fulfillment within a few business days, online reporting in real time for credit card transactions and so-called batch processing when business gets hot and heavy.

Beware if the proposed transaction fee is significantly above 2 percent, or if you have difficulty understanding your provider's explanations for how the mail order merchant account system will work. If it's confusing to you, it will be confusing to your customers.

See related: 6 questions you should ask about merchant accounts, Merchant account terms:Glossary, definitions

Updated: September 10,2023