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When we think about e-commerce payments, traditional payment processors and gateways usually come to mind. However, this trend is rapidly changing. According to Statista, 74% of B2B customers would switch to a new e-commerce site for better purchasing options.

This highlights the importance of having an efficient payment system more than ever before.

In this article, we take a close look at e-commerce merchant services and how to choose the best provider for your business.

Why E-Commerce Businesses Need Merchant Services

E-commerce businesses sell entirely online. They need merchant services to accept payments smoothly. Partnering with a reliable provider ensures seamless transactions and regulatory compliance. These services often include additional features, such as open banking payments and online reporting tools.

What Is an E-Commerce Merchant Account?

A merchant account for e-commerce is a specialised bank account for businesses to accept online payments. It serves as a bridge between the customer's bank and the business's bank.

When a customer makes an electronic payment, the merchant account processes the transaction by communicating with the card issuer. It withdraws funds from the customer’s bank and credits the merchant. Additionally, a merchant account connects businesses to merchant service providers.

Other E-Commerce Merchant Account Services

These cover all the essentials needed for an e-commerce business to accept and process payments. For example, essential software and services needed to process cards, mobile wallets, contactless payments, and other methods.

Merchant Services

Typically, these electronic commerce merchant services are provided by banks, payment processors, and other financial institutions. Some of the services include:

  • Payment Processing: E-commerce merchant processing refers to the intricate tasks of communicating between gateways, processors, banks, and credit networks, to make sure the funds effectively move from the customer’s to the merchant’s account.
  • Payment Gateway: They function as an intermediary between customers and payment processors. Payment gateways encrypt and transmit payment details.
  • Analytics & Reports: Gathering and organising customer and payment data. They can offer valuable insights for data-driven decision-making for e-commerce businesses.
  • Checkout Page: This may include pre-built user interfaces (UIs) or other tools to optimise the user experience (UX) and reduce cart abandonment. Typically these interfaces are customisable to match your branding.
  • Mobile Payments: Enables payments via tablets and smartphones. Typically a merchant service provider would support popular mobile wallets like Apple Pay and Google Pay, along with in-app payment options.
  • Open Banking Payments: Allows secure data sharing through regulated application programming interfaces (APIs). It facilitates account-to-account (A2A) payments, providing quick fund transfers and an enhanced UX.

Fees are Associated with Merchant Services

As an e-commerce business, you may encounter various payment fees. These can vary between providers, so it's important to check with each provider for specific details. Ensure you understand how their pricing works and confirm it fits within your budget. Below are some typical fees:

Fee typeDescription
Payment GatewayIntegration fee for hosted checkout pages and API for custom development
Transaction CostCharged per transaction for processing credit and debit card payments
ChargebacksFee for a reversed transaction
Early Termination FeeCharged if the contract is exited early, often based on the remaining contract period
Setup FeeInitial cost to set up physical or virtual terminal
Cancellation FeeFixed fee for canceling the contract
Minimum Monthly Transaction FeeSmallest amount charged monthly on transaction fees
Data Security ManagementFee for ensuring PCI compliance standards are met
Non-secure TransactionFees for high-risk payments like mail, telephone, online (not pay-by-link), and non-chip and PIN payments
RefundsFee for processing refunds
Anti-Fraud MonitoringFee for services that monitor transactions to detect and prevent fraudulent activity
Authorisation FeeCharged each time a business authorises a credit card transaction

How to Choose a Merchant Service Provider

Before setting up a merchant account for your e-commerce business, you’d need to choose a provider. To make the best decision, conduct a thorough research and consider multiple factors.

  1. Determine Your Business Needs

First, establish your payment processing needs. Evaluate factors like sales volume, average transaction value, and preferred payment methods. This helps identify essential features and ensures the provider can support your e-commerce business effectively.

  1. Compare Providers

Start by consulting reliable sources and online reviews for recommendations. Consider what e-commerce merchant solutions are used by other businesses.

Prioritise security and compliance to PCI DSS and fraud protection measures. Ensure seamless integration with your existing systems, including business management, CRM, accounting software, and hardware, to automate sales data import and improve accuracy.

Make sure e-commerce merchant account providers’ pricing is transparent and aligns with your budget and transaction volume. It’s worth also evaluating customer support, and checking client reviews on websites like Trustpilot.

  1. Test & Trial

Evaluate the provider’s services using a demo or trial period. Check for functionality, ease of use, and reliability. During this period, pay attention to processing speed and any potential issues.

Merchant Services with Noda

​​Noda is a global open banking provider that assists merchants in e-commerce with end-user KYC, payment processing, LTV forecasting and UX optimisation. We partner with 16,500 banks across 27 countries, spanning over 30,000 bank branches. Noda supports a wide range of currencies for globally-minded clients. We offer scalable plans to fuel your business growth and e-commerce plugins for easy integration.

With Noda's advanced Open Banking API, online businesses can easily integrate direct bank payments, offering their customers a seamless and secure payment experience with lower fees. Whether you're looking to enhance customer verification processes, optimise payment systems, forecast long-term value, or refine the user experience, Noda is your partner in growth.

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