ECommerce, the new business buzzword has seen many takers recently. Most big companies have jumped into the band wagon of selling online and the results have greatly added to bottom-lines. Along with their success, Ecommerce solutions have also evolved over this period and today, there seem to be infinite number of solutions to enable a website with ecommerce capabilities and payment gateways that include credit card processing and other online payment gateways. Basically e-commerce websites can be enabled to accept payments in two ways:

1. Accept online payments via a own Internet merchant account.
2. Accept credit cards online through a third party payment processor.

The cost and levies of an ecommerce enabled website are numerous. All the relevant costs are not listed at a single place making it thoroughly confusing and stressful exercise to estimate or see. Membership fee, gateway fee, transaction fee, statement charges, variable transaction fee etc.. and the list goes on. Keeping track of costs and periodic payments are a source of regular logistical headaches.

In a typical situation, internet merchant accounts are provided through an acquiring bank that will let you accept credit cards, and in some cases, other types of payments, online. Like any other business, advantages and disadvantages are a part of the online payment systems and credit card processors.

Advantages are to have direct control of the payment processing system along with all risks involved and disadvantages are to do with security, mechanics and logistics of responsibility of the process.

The advantages of having a Merchant Account or other Online Payment Systems:

* Customer advantage - Online merchant accounts facilitate a customer to send payments without the hassles of writing and sending a check. This reduces order processing time.

* Functionality - Internet payment processors tend to enable the website to act as a direct-sales generator than just being a lead-generator or an online brochure.

* Direct sales channel - Credit card processors tend to help your website to add the sales from internet as a revenue stream.

* Immediate authorization – no waiting periods, payments are cleared instantly and status is available immediately. Instead of waiting for check to come and deposit and clear, this can greatly enhance order processing efficiency and reduce lead times.

* Organize payment processes - Internet merchant accounts and payment providers need a minimal number of steps to validate payments than normal and traditional processes.

Disadvantages of having and using Internet Merchant Accounts

Like most other business systems, there are certain disadvantages associated with online payment systems. They are

* Responsibility – Maintenance of site functionality, field service etc are the responsibility of the website owner. The risk that come with the responsibility are great.

* Fee - Internet merchant accounts carry many kinds of monthly fee. The whole fee has to be borne in mind and paid regularly to keep the account active.

* Fraud – Being a merchant, dealing with fraudulent credit cards becomes your responsibility. This is a major source of stress and loss if not handled properly, can result in great losses and bad will.

* Security - Internet merchant accounts are reliable and secure. However, private and sensitive information like credit card numbers can be stolen; system integrity may be breached. These risks are inherent with the system and need to be taken care of.

* Agreements - Internet merchant accounts are associated with long and arduous agreements. Minimum time frames are required to be maintained and hefty fee is the normal result.

Despite the shortcomings and advantages involved with merchant accounts, they are by far the best option available.