Basics of Online Merchant Banking
E-commerce is definitely on the rise. More and more businesses are taking advantage of the internet revolution and opening up online shops to sell their products and services. This increase in the number of internet businesses has meant that there has been a greater demand for online merchant banking. Online shop owners need to have a merchant account setup if they want to accept online credit and debit card payments from their customers. Credicorpbank.com was the first bank in Panama to be inolved with ecommerce and if you are looking for any kind of online merchant banking services they would be my first choice. While setting up a merchant account isn’t that difficult, there are certain security risks that remain with online merchant banking. One has to make sure that these risks are properly assessed before making a commitment.
The e-commerce industry has only just started to find its feet. This is why there are a number of things that are still somewhat new for the people and the merchants alike. The banking industry has done its bit to keep up with the rising demands of the online businesses. The concept of online merchant banking was created just to facilitate the growing e-commerce field. The following are some of the basics of online merchant banking that you should know about if you are looking to setup an e-commerce business.
|Merchant banking has different companies who operate unlike traditional bank accounts. It is reserved for merchants who are looking to accept payments made using a credit or debit card. This account holds the funds that are transferred by a customer to the merchant when he purchases one of his products online. The funds remain in this merchant account for a short time period after which they are transferred to a traditional business account. Merchant accounts need to be applied for separately from a merchant account provider which is usually a bank.|
|Before funds captured from online sales are transferred into the merchant account they need to be validated first. This service that is responsible for authorizing and validating the online transactions is called the payment gateway. It is an e-commerce service which performs the task of checking whether the cardholder has enough funds to complete the transaction or not. Once the confirmation is made, the payment is authorized and then transferred to the merchant account. Merchant account providers usually make use of 3rd party payment gateways.|
|Payment processor is the company that is in charge of handling transaction requests. It is responsible for receiving inquiries from the payment gateway regarding online transactions and contacting MasterCard and Visa for settlement and authorization files. The payment processor then has to distribute these files to the different payment gateways so that they can validate the online transactions.|
Risks Involved with Online Merchant Banking
While online merchant banking seems to be an efficient means of handling online transactions, it is not without its risks. Security is one of the most important concerns with this type of banking. The following are some of the risks that need to be assessed before utilizing online merchant banking services.
• Online Theft
One of the biggest risks with online merchant banking is that of online theft. Since this form of banking deals with a lot of cash on a daily basis, it is a prime target for online thieves. Cyber criminals are looking for ways through which they can breach the security features employed by the merchant banking services providers all the time. They just need to be successful once in order to leave the merchants out of their hard earned money.
• Cyber Attacks
Cyber attacks are a growing concern for everyone connected to the internet. Like with any other online service, online merchant banking faces this threat too. Hackers can cause a great deal of damage to the credibility of an online business if they were to succeed in getting their hands on the confidential financial information shared by the online customers.
• Reliability Issues
Reliability is yet another concern with online merchant banking. While there are many improvements being made in this regard, there have been plenty of instances when the online services of a merchant account provider went down suddenly for a lengthy period of time. This reliability issue really makes it difficult for merchants to ensure that their customers can utilize the online payment system without experiencing delays.
Risk Assessment for Online Merchant Banking
Considering the risks that are involved with online merchant banking, it is important to do a little risk assessment when applying for a merchant bank account. The following are some things that need to be considered when choosing online merchant banking services providers.
• Data Encryption
• Security Certifications
• Security Breaks
• Continuous Monitoring