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Grow Your Business Technology

What Is a Virtual Merchant?

image for demaerre / Getty Images
demaerre / Getty Images
  • Virtual merchants are basically online storefronts.
  • By establishing a merchant bank account, companies can accept credit and debit card transactions as payment.
  • There are many ways to be a successful virtual merchant, but security, communication and excellent customer service are the main priorities.

A virtual merchant is a website that sells goods and services to the public via online transactions with debit and credit card processing. The end result is a fully online experience where consumers can virtually visit a store to browse goods, purchase them fully online and receive them in the mail several days later, all from the comfort of their personal computers.

Virtual merchants comprise multiple features that basically make a website into an online store. Online stores provide e-commerce capabilities by processing payments for orders and then shipping the goods or services either digitally or physically.

Some brick-and-mortar stores may create a website that only describes their store or displays the goods they sell, without selling anything online. Virtual merchants are a different breed from these simple informational websites, using a merchant account to create a secure online storefront. Merchant accounts create a contract between the store and online credit card processing companies. As part of this merchant account agreement, the virtual merchant pays the processor a percentage of each transaction on the online store. In some cases, this fee comes out to a monthly rate with a set per-transaction fee.

Virtual merchants expand the functionality of a website beyond an informational resource into a usable storefront. A virtual merchant service can reduce the overall work and costs associated with creating an online storefront, freeing you up to run your business as it was meant to be.

Using virtual merchant services for your website can benefit your business in several ways:

  • It improves customer service levels.
  • It reduces administration and maintenance times for retail websites.
  • It removes the geographic barrier for consumers, allowing national and international sales.
  • It facilitates more positive sales experiences.
  • It easily integrates with your existing website for brand continuity.

Making each transaction as secure as possible is a main selling point of any company trying to build credibility through a web presence. Virtual merchant services are an ideal solution, as they offer all the necessary security measures to protect and keep private each buyer's payment information. The payment process is protected through secured sockets layer (SSL) encryption to prevent data interception during an order, and account information is stored behind a multitiered firewall.

The most important part of any online purchasing experience is the ease of the ordering process. Shopping cart features and user accounts that remember purchasing information are good for customer retention. A typical order processing form requests a customer's credit card information, billing and shipping address, and preferred shipping options.

Each of these functions is ultimately governed through virtual merchant software to ensure a seamless and painless experience. The software is often available in one of two formats – hosted or in-house. With a hosted solution, the virtual merchant service maintains the payment portal and allows you to edit its look and essentially create your store on the virtual merchant's servers and databases. With an in-house solution, you install the software on your own website servers and integrate the merchant application with your existing website. Both have inherent benefits, such as customization or reliable management, but the choice ultimately depends on your company's overall needs.

Many virtual merchant services exist that cater to both online and offline business presences, though many that specialize in online retail offer more features and functionality. These service providers offer virtual terminals to create a fully functional payment gateway for processing purchases and creating a fluid shopping experience. Flagship Merchant Services, Merchant Warehouse and National Bankcard stand out as some of the most popular options thanks to their low merchant account fees and comprehensive virtual merchant services.

To operate as a virtual merchant, you must establish a merchant account for your business. This is a type of bank account that allows organizations to accept credit and debit card transactions as payment. While it is possible to use a third-party payment facilitator, like PayPal or Square, these companies are less likely to take on high-risk clients or merchants. Typically, a merchant account from a bank can also provide lower rates for use, which could definitely benefit your bottom line. A payment facilitator is easy to set up and can be good if your business needs to accept credit and debit card payments in a short amount of time, but a merchant account is worth the wait for many businesses.

An online store and catalog is an essential part of operating as a virtual merchant. Create a website that allows customers to peruse your products and services and to purchase instantly. You can add an online store as a new page of your existing website if you have one or simply link it to your Facebook page.

Being a successful virtual merchant requires excellent customer service and communication. In order to provide top-notch service, you should provide a clear, concise explanation of your products and services.

Communication options are also key. These can include email updates of shipping and processing or online chat options. As a virtual merchant, your company must be able to respond to questions and fill your customers' needs as quickly as possible.