Updated November 19, 2023

Best E-commerce Merchant Account

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Looking for an e-commerce merchant account to help expand your business? Read on to see which one could work for you.

It can be hard to choose an e-commerce merchant account provider. You second-guess if you're getting the best processing rates. Then, you wonder if their features can work in the long run.

Not to mention, it's not certain that you'll get approved for an account. So, to lessen the hassle, we've done the research for you. Take your time to explore the options below.

Who are the best e-commerce merchant account providers?
The best e-commerce merchant accounts are offered by:
  1. Square for New Businesses or Startups
  2. PayPal for International Businesses
  3. Stripe for Large and Established Businesses
  4. Stax for High-volume Businesses
  5. eMerchant Broker for High-risk Businesses

5 Best E-commerce Merchant Accounts

Not all merchant accounts are the same. Each provider will have their own edge in terms of features and processing rates.

Let's start with an option for new businesses.

You need a merchant account to take debit and credit card payments from your online store. But technically, you can take these payments even without your own merchant account. That's because Payment Service Providers (PSPs) offer these services, too. We've mixed the best PSPs below.

Square: for New Businesses

It's easy to open an account with Square. There's no underwriting process, so even a new e-commerce business can open an account.

Square even lets you create a free online store. It has Afterpay built-in, so your customers can pay in interest-free installments. But you're paid in full right away.

Plus, your Square account integrates with Square POS. So whether you have a physical store or not, some features you can get include inventory management, customer management, shipping, and in-store pickup.

Rest assured, your Square website will be mobile-friendly. Your customers can easily scroll and shop with their phones.

Pros + Cons:

  • Free plan and app available
  • No underwriting process
  • POS hardware available
  • Live phone support
  • Pricey flat-rate fees
  • Susceptible to account holds or freezes

Plans and Processing Fees:[1]
Square offers a free plan. You'll only have to pay for the processing fees. This makes it budget-friendly for new or small businesses that don't have steady sales. The rates are:

Online 2.9% + 30¢
Manual keyed-in 3.5% + 15¢
Invoicing3.3% + 30¢
In-person 2.6% + 10¢
Afterpay6% + 30¢

For more advanced features, you can also upgrade to a Plus plan ($29+/mo). Custom pricing is available for large businesses.[2]

You can use Square's calculator to estimate how much you'll pay for transaction fees. Make sure you're getting a good effective rate.

PayPal: for International Businesses

PayPal is convenient if you have customers from other countries. After all, it's one of the most popular payment services worldwide. It lets you take PayPal, Venmo, credit card, and debit card payments, offering more choices to your customers.

You can also send payment links, QR codes, or invoices.[3] [4] These can make it easier for your customers to pay right away.

When it comes to setting up your website, PayPal works with many e-commerce platforms like Shopify, Big Commerce, and WooCommerce. They also have POS equipment available for your physical store.

You don't need to worry about cash flow with PayPal. You can get your cash within minutes into your PayPal account. But it can take 1-3 days to withdraw the money to your bank account.[5]

Pros + Cons:

  • Free business account
  • Accepts PayPal, Venmo, and Rewards payments
  • Accepts 25 currencies in 202 countries[6]
  • Pricey transaction fees
  • Varying fees can be confusing

Plans and Processing Fees:
Creating a business account with PayPal is free. You'll only need to pay for processing fees:[7]

PayPal & Venmo payments3.49% + $0.49
Online debit/credit card2.59% + $0.49
Online debit/credit card (with chargeback protection)2.99% + $0.49
QR code payments2.29% + $0.09

Do I need a merchant account for e-commerce?
You'll need a merchant account to take online payments from your e-commerce store. Without one, you'll at least have to apply to a payment service provider for a "sub-merchant" account. PayPal, Square, and Stripe are some examples of payment service providers.

Stripe: for Large and Established Businesses

Stripe has an extremely customizable user interface, including an embeddable checkout form for e-commerce transactions.

You can also send shareable links and invoices to your customers, or take ACH payments if you prefer.[8] You can even take in-person payments if you purchase a Stripe terminal.

The catch is that customizing Stripe to your liking will require some coding. So you'll need a team of in-house web developers to really make the most out of the customizable UI. That, or you can outsource the work.

Pros + Cons:

  • Accepts 135+ currencies[9]
  • Direct integrations with banks and card networks
  • Pre-built integrations with e-commerce platforms
  • Might be too technical to use
  • Varying fees to consider
  • Not ideal for small business owners

Pro tip: With Stripe, you can customize roles and permissions for your team, which protects your customers' information. You can also create collaboration notes to keep them in sync regarding refunds and payments.

Plans and Processing Fees:[10]
With Stripe, there are no monthly or setup fees. All you'll need to pay for are the per transaction/invoice fees:

Online payments2.90% + $0.30
Keyed-in payments3.40% + $0.30
Invoicing0.4%
In-person payments2.70% + $0.05
Tap to pay$0.10

Worried about cash flow? You can set the timing of your payments with Stripe to either weekly or monthly. Alternatively, you can opt for instant payouts for a 1% fee.[11]

Stax: for High-volume Businesses

Unlike Stripe, Stax lets you customize your shopping cart without the need for coding. But if you don't want to get too into it, there's also a pre-made cart you can use.

Stax also integrates with many online payment gateways like BigCommerce, WooCommerce, Magento, etc. So you may find an option you already prefer.

The account comes with many business-related features, too, like inventory management and reporting. This allows you to make data-driven decisions when it comes to improving your business.

Pros + Cons:

  • Predictable pricing
  • Multiple payment gateways
  • Pre-built shopping cart
  • QuickBooks integration
  • Custom brand customization, digital gift cards, and next-day funding are add-ons

Plans and Processing Fees:[12]
Stax offers flat-rate subscription plans. This is much easier to budget compared to pay-as-you-go plans. The price will only change depending on your transaction volume.

$250,000/year or less$99/month
$250,000-$500,000/year$199/month
Over $500,000/yearCustom pricing

eMerchant Broker: for High-risk Businesses

As a high-risk business, finding an e-commerce merchant account provider can be extra challenging. But with eMerchant Broker (EMB), you'll get a higher chance for approval. You might even get approved in just a day or two.

High-risk industries they support include CBD, e-cigarettes, online gaming, and the adult industry. They also support businesses with poor credit or those who are just beginning to build one.

EMB integrates with many e-commerce platforms like Wix, Shopify, WooCommerce, and more. So if you plan on setting up an account, you'll have many integrations at the ready—which is always a plus in our book.

There are other high-risk merchant account providers on the market if you're on the hunt for them. You can find the best ones on our list.

Pros + Cons:

  • A+ BBB rating[13]
  • 99% approval rate
  • 24/7 customer support
  • Many e-commerce integrations
  • Undisclosed fees
  • May require a long-term contract

Plans and Processing Fees:
Unfortunately, EMB isn't transparent with their fees. You'll have to contact them to get a quote. This is likely because many factors will affect your processing rate as a high-risk business.

What is a high-risk business?
You're considered a high-risk business if you have a higher potential for chargebacks or fraud. Because these businesses are deemed risky, most payment processors avoid them. It's important to look at high-risk payment processors, like eMerchant Broker, since they may specialize in your industry.

What is an e-commerce merchant account?

An e-commerce merchant account is what you use to accept debit cards and credit card payments for your online store. It's also a "holding account" that keeps your money before it gets transferred to your business bank account.

That said, a merchant service provider typically offers an all-in-one service. You can often process mobile payments (mobile merchant account) or in-person payments (retail merchant account) from your physical store while taking card payments from your website.

Keep in mind that e-commerce transactions are typically more expensive compared to in-person payments. This is because online payments are riskier since the cardholder is not physically present to make the transaction.

Merchant Account Providers vs. PSPs

You can technically accept debit and credit card payments on your website even without your own merchant account. You just need to work with Payment Service Providers (PSPs).

Merchant account providers offer you your own merchant account with your own Merchant ID (MID). This MID is unique to your business and serves as an "address" to where the funds are sent.

Payment Service Providers (PSPs), on the other hand, don't offer you a merchant account. Instead, they place your business, together with other businesses, under one "umbrella account"—a single merchant account.

Why do you need a merchant account?
Having your own merchant account is a more secure option. Accounts with PSPs are more susceptible to holds or freezes. But to get a merchant account, you'll have to go through an underwriting process (which isn't necessary for PSPs).

Square, PayPal, and Stripe are actually payment service providers, while Stax and eMerchant Broker are real merchant account providers. However, all of them will be able to help you take online payments for your business.

Which bank account is useful for merchant class?
You'll need a merchant account, which is a bank account used to process cards and other online payments. After being pulled from the customer's bank account, the money from a transaction is held in this merchant account.

E-commerce Merchant Account Services

E-commerce merchant account providers offer a wide variety of services. Aside from accepting credit and debit card payments, here are other features you can get:

  • Shopping Cart and Checkout
    Some providers offer pre-built shopping carts or checkout while others let you customize them yourself. They may even include other features like gift card options and abandoned cart email reminders.

  • POS System
    Merchant account providers typically have integrated POS systems. With it, you can accept debit and credit card payments online and in person.

    You'll also have your sales information synced in real time. Just purchase POS hardware for a complete setup.

  • Website Builder or Integrations
    Some payment service providers offer website builders or integrations for various e-commerce platforms. You may be able to create a new online store or connect a shopping cart to an existing website.

  • Social Media Integrations
    A social media presence is a must for any hopeful business owner. Good thing some merchant account providers let you sell on your socials like Facebook or Instagram. But you can also just share payment links or QR codes on them.

  • Management Features
    You may get features on inventory management, employee management, and customer management. These can help you run your business more smoothly on the back end.

  • Reporting
    Looking to grow your business even further? Use different reports to make data-driven decisions. These are usually accessible from your merchant account dashboard.

What is the difference between eCommerce merchant and online retailer?
A retail merchant account is more suitable for those with physical stores, as you'll typically need POS hardware to accept card payments. For e-commerce merchant accounts, no hardware is needed as it caters to online businesses.

How do you choose an e-commerce merchant account?

It isn't always easy to apply for a merchant account, especially with the underwriting process. So before you select a provider, here are a few factors you should consider:

  • Accepted Payment Methods
    What payment methods do you plan to take aside from credit and debit cards? You may also want other features like invoicing and ACH processing.

    For in-person sales, you can typically accept contactless payments such as Apple Pay and Google Pay. But you may need to purchase additional card readers to do so.

  • Fees and Pricing Structure
    Aside from transaction fees, merchant accounts typically come with other fees, such as monthly fees, PCI compliance fees, chargeback fees, etc.

    Consider the pricing structure most suitable for your business. Interchange plus pricing may be better for small businesses, while subscription plans might fit larger businesses more.

  • Payment Gateway
    A payment processor can offer multiple payment gateways. These payment gateways could also have their own fees. If you have a preferred option, be sure to inquire about it.

  • Security
    A merchant services provider should offer end-to-end encryption/tokenization to ensure no one can store sensitive data. They may also offer advanced fraud detection tools, especially if you're a high-risk business.

    Also, merchant accounts should follow the requirements of the PCI Security Standards Council. Check if the provider is PCI-compliant and if there are other fees associated with it.

    It's even helpful if you can set user permissions. That way, only essential staff can access customer information.

    With tokenization, the customer's data is encrypted before it reaches your database servers. It replaces the data with randomly generated characters, which can help reduce data breaches. This enables you to accept payments securely, so neither you nor your customers will suffer fraud.

  • Integrations
    There may be integrations for e-commerce platforms like Shopify or business tools like QuickBooks. If you think integrations like these can help your business, check which are available with your merchant account.

  • Scalability
    Make sure that the merchant account provider can cater to your business as it grows. This could either be in the form of transaction volume or add-ons.

  • Contract
    Many payment processors offer month-to-month contracts with no termination fees. But high-risk businesses may be tied to long-term contracts (2-3 years). Consider the terms when you budget.

  • Customer Support
    Whether it be for chargebacks, refunds, or other payment problems you encounter, it always helps to have access to great customer service. You can test this out by inquiring as much as you can when looking around for a merchant services provider.

Methodology

When analyzing different e-commerce merchant accounts, we considered the following:

  • Services they offer
  • Scalability
  • Pricing structure
  • Suitable type of business

Although the ability to accept card payments online is the main draw of an e-commerce merchant account, we wanted to know what additional features came with one. More payment options equals more convenience for your customers.

We also checked if different pricing plans let you use the account long-term. To cater to varying business sizes, we looked at the best pay-as-you-go plans and subscription pricing options.

Generally, we made sure there was an option for everyone—new, established, or even high-risk businesses. The best for each type won't always be the same provider.

What the Experts Say

CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:

Bottom Line

It's not a one-size-fits-all solution. To find a suitable eCommerce merchant account, consider your business needs first.

Don't just focus on finding the cheapest processing fees, either. Security features and scalability are critical, too.

Remember, these merchant account providers are supposed to help your business grow. Go for one that not only allows you to take online payments but does so in a way that's convenient for you and your customers.

References

  1. ^ Square. Payments, Retrieved 05/15/2023
  2. ^ Square. Pricing, Retrieved 8/13/2023
  3. ^ Paypal. Invoice, Retrieved 8/27/23
  4. ^ Paypal. QR code, Retrieved 8/27/23
  5. ^ Paypal. Where's my withdrawal?, Retrieved 8/27/23
  6. ^ Paypal. About us, Retrieved 8/27/23
  7. ^ PayPal. PayPal Merchant Fees, Retrieved 8/13/2023
  8. ^ Stripe. Payment links, Retrieved 8/27/23
  9. ^ Stripe. Currencies, Retrieved 8/27/23
  10. ^ Stripe. Pricing, Retrieved 05/15/2023
  11. ^ Stripe. Instant Payouts, Retrieved 8/27/23
  12. ^ Stax. Pricing, Retrieved 05/15/2023
  13. ^ BBB. EMB, Retrieved 8/27/23

Write to Karen Eloriaga at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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