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Last Updated: 06. November 2018

Receive Online Payments with an Online Merchant Account

Receiving worldwide payments from customers for online purchases made on their Mastercard, Visa, or American Express requires having an online merchant account. This bank account equips your business with the necessary means to receive online payments from customers, making the entire process easy and more secure.

Like a regular merchant account, an online merchant account is necessary for a business to be able to accept credit or debit card payments from online shoppers. The main difference is that an online version particularly allows your business to receive credit card payments made through the internet.

For professional advice and comparisons of online merchant account services and providers, please fill in the request form at the top of the page. Market Inspector will send 4 free, non-binding quotes customised to your needs to help you find the best solutions for your business! 

Find Out More About Online Merchant Account On This Page

What Is an Online Merchant Account?

An online merchant account allows you to receive payments over the internet. Whenever customers make an online payment for your goods or services, an this bank account will help making the payment go through in a smooth and secure manner.

It is issued by a bank or a Payment Service Provider (PSP). The merchant account is not a regular bank account, but acts as holding pen for credit card transfers. A payment gateway collects authorisation from the bank of the customer and the issuing credit card company. It is a means for the bank or PSP to control the online money transfers coming in and have time to process them.

Your bank or PSP manages the merchant account. You cannot access or transfer money from that account, but instead the money received from online payments gets redirected to your regular account when it is fully processed. It is the bank’s or the PSP’s job to make sure all the funds are transferred to your account correctly.

If you would like to know more about the entire online payment process, please have a look here.

Woman paying with card online

What Is a Payment Gateway?

A payment gateway is a service used for online transactions. Online transactions use this gateway as a secure connection through which card details can be sent safely. It then authorises online payments from consumers to businesses. In a sense, it works like an online version of the ePOS systems used in most stores.

After the details of the online transaction are safely authorised and secured, the transfer will be completed. The payment will be sent to your online merchant account, where the bank can reroute it to you after they have processed the payment.

An online merchant account and payment gateways are interdependent. For the money to securely reach your bank account, the payment gateway first needs to send secure information to the relevant parties. Payment gateways are provided by a third party.

Online Payment Gateway Solution Providers in the UK

In the UK, multiple options are available when looking for a Payment Gateway to support your online merchant account. Every single supplier of these online payment services has their own features and benefits, some even issue your own merchant account at the bank. Compare different merchant account providers in the table below.

Worldpay Merchant Account
  • Offers their own merchant account next to payment gateway services

  • Accept over 120 currencies

  • 24 hour support

Realex payments Merchant Account
  • £27 / month

  • Free setup

  • Mobile device compatible

  • Brand customization online payment

  • Provides merchant account with payment gateway services

  • Starting at £19

  • 2,49% + £0,15 per transaction

  • Free additional services

Sagepay merchant account
  • Starting at £20 / month

  • Ability to scale up and dow

  • Availability of other business services such as payroll services

Universtal transaction merchant services
  • Virtual terminals

  • Payment gateways

  • Merchant funding

  • Wide variety of compatible online shopping carts

Pay Pal online payment transactions
  • No setup or monthly costs

  • Wide variety of compatible merchant accounts and currencies

  • Starting at 3.4% + £0.20 to 1.9% + £0,20 per transaction

First data merchant account provider
  • Payment gateway

  • Mobile device compatible

  • Supports alternative payment methods

  • Welcoming to small businesses

Various merchant account providers may offer certain added benefits and services, such as offering compatible mobile card machines for your business. It is crucial that you do your research to establish what your business needs are, in order to find the best merchant account solution.

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What Fees Do You Need to Pay for an Online Merchant Account?

An online merchant account is almost never free. Since the bank or PSP is taking on risk by accepting payments that need time to be processed before it is actually available to them, they often charge a fee. These fees come in the form of portions of transactions or added constant fees. Some types of fees are explained below.

Different providers of online merchant account have their own unique fees. It is possible that banks charge different fees for businesses that are considered of higher risk. Fill in the form to find out what fees providers would charge you.

Fixed Fees for Online Payment 

A setup fee is charged by the provider for opening a new account in your name. Some banks charge nothing, others can charge up to £100. This is a fee that is paid one time only in the beginning.

It is very common for a provider to charge a monthly fee. Monthly fees are a payment for the provider for delivered services. It depends on the provider how high this fee is. Some charge nothing, others charge up to £150.

Lastly, there are incidental fees. They only occur in some rare instances like chargeback or consumer retrieval request fees. On Merchant Maverick more information is available on what type of fees exist for an online merchant account.

Variable Fees for Online Payment

Variable fees are determined based on the volume and amount of transactions of your business. There is a range of variable fees that a provider can charge you. Some of the most important are highlighted.

Transactional fees are fees charged at every single transaction. Most providers charge a percentage of 2-3% of the total amount paid by the online shopper. Your fee can decrease depending on how many online transactions your business receives each month. The higher the amount of transactions, the lower your transactional fee will be.

Flat fees are sometimes charged on top of transactional fees. It depends on the agreement with your bank about how high these fees are. For most merchant accounts these fees are charged according to credit card terminal use, but with an online merchant account they are linked to the Payment Gateway. Flat fees are usually a fixed fee of roughly £0.10-0.30 per transaction.

3 Benefits Of Using An Online Merchant Account

With online merchant account businesses are able to accept credit card payments over the internet. As the internet market is ever-increasing, obtaining an online merchant account can provide your business with increased revenue. For small businesses this can be an opportunity to grow bigger in the online space.

Flexibility and speed

Your business gets more flexible as it is able to receive online payments any hour of the day, every day. On top of that, all the transactions made are transferred and processed faster than before. This makes shopping online very easy for customers.

Supporting business operations

In-house operations also get easier, because the archived transactions make it easy to keep track of bookkeeping. It goes even further as this bookkeeping can be used for Customer Relations Management, Payroll services and many other business operations


An online merchant account is very safe. Together with the online payment gateways, it handles sensitive card information very securely. This way you can make sure that you and your customers are not losing any money.

Credit Card Detail security

Risks Involved in Online Merchant Account

Businesses are always prone to various kinds of risk. With an online transaction there are also risks involved. Luckily most providers of the merchant accounts help your business to minimise risks. Some of the dangers are explained here.

Credit risk is always present in the online market, especially for online retailers. Customers pay you in advance for service or goods you provide. It is your responsibility to deliver the prepaid product or service. Failing to do so can lead to dissatisfied customers and extra fees for chargebacks.

Financial stability is another key aspect of the risk involved. Most providers base the fees they charge you on the financial credibility of your business. The better your finances, the lower the fee. Decreasing financial stability might result into higher costs for an online merchant account.

The risk of engaging in the use of online business depends on a number of factors. Examples can be size, industry or particular product you are selling. Luckily there are not a lot of general risks involved. Money transfer and online shopping is made very safe.

How to Open an Online Merchant Account

There are two ways to obtain an online merchant account. You can go directly to the bank, or consult with a Payment Service Provider (PSP). In both cases you will need to undergo a screening process to exclude any risks.

Your bank can provide you with an online merchant account. You would still need, however, a secure payment gateway provider to be able to use that account. Many third party gateway providers let you choose your own bank to partner with.

Another way is to go to a PSP, which can set up an online merchant account for you with a preferred bank. This online merchant account is then automatically linked to their secure payment gateway solutions.

In both cases it is wise to carefully consider requirements and fees. Also consider whether or not you want to switch banks for an online merchant account.

Screening Process for an Online Merchant Account

Any business can apply for an online merchant account. However, banks need to do background checks to make sure that they are not taking on too many risks. They often require you to send in some relevant documents.

Relevant documents screening process

Amongst those documents are detailed business plans, a website, supplier details, expected revenue, number of credit card transactions and trading history. In most cases, your business is required to keep the provider up to date with these documents when their service is being used.

For professional advice and comparisons of online merchant account services, fill in the request form. Market Inspector will send 4 free, non-binding quotes customised to your needs to help you find the best online merchant account services and providers!

Get Quotes Now! It only takes 1 minute!