An Internet Merchant Account (IMA) is a vital component of any e-commerce operation. Businesses wishing to accept payments online must have an IMA if they want to accept card payments via the web.
A Merchant Bank (also known in this particular role as an ‘Acquiring Bank’) will issue an IMA. It’s the bank’s job – as an acquirer of funds from card schemes such as Visa and MasterCard – to deposit customer credit and debit card payments made online into your IMA.
Most high street banks offer this service, but an IMA is not a normal bank account. You won’t have direct access to deposit or withdraw funds. Instead, it’ll be managed entirely by the bank or by your Payment Services Provider (PSP).
An IMA is cleared of its balance at regular intervals by the Merchant bank, either under an agreement with you or acting under instructions from your PSP. This clearing process transfers payment funds to your regular business account. This is known as ‘settlement’.
The speed and regularity of settlement will often be dictated by any perceived risk in your business. The riskier the business the slower settlement will be. Understandably, the bank will want to make absolutely sure the funds are cleared.
Depending on how much time you are prepared to wait and the quality of your business plan, there are two different ways to obtain an Internet Merchant Account:
In either case, your business will be reviewed and the potential risk in your business plan will be evaluated before you are approved for an IMA.
You will also need to agree fees associated with the account – such as authorisation charges and deductions that cover the risks of accepting card payments.
So which way should you go? Both have their advantages and disadvantages...
It’s logical to speak with your bank first about extending your existing business relationship and combining operational costs. However, high street banks often have stricter requirements and greater reluctance to service smaller merchants or higher risk business plans. Indeed, they will often take more time to review your application, thereby lengthening your time to market.
On the other hand, an independent PSP can use its expertise and banking relationships to get you an IMA quickly. A PSP is more specialised than a bank. So, by focusing only on the needs of those wishing to process card payments online, the chances of an application for an IMA being successful are greater – especially for smaller or new businesses.
Fees and rates vary depending on the solution and the supplier. So it’s worth shopping around and obtaining several quotes before making a decision. Also, ask if the fees quoted are inclusive of everything you need or whether you will be paying another provider in addition to your IMA provider.
Here’s a top line checklist of what you’ll be asked for, either immediately or during review, when you apply for an IMA:
Want to find out more about how to get an Internet Merchant Account? Get in touch today to see how we can help your business.
Although your business bank seems like the most obvious place to obtain your IMA, it is often worthwhile shopping around with online payment services providers. They usually have relationships with a number of acquiring banking partners that they can leverage in your favour to secure more competitive rates.
Read moreA Merchant Account differs from your standard business account in that the bank, usually referred to as the acquiring bank, allows card schemes to make payments, chargebacks, refunds and other payment transactions into it.
Read moreIf you want to process payments online, you will need an Internet Merchant Account (IMA). You can accept online payments into your IMA, process refunds from it to your customers and, by arrangement with your bank, settle funds out of it to your business bank account.
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