Why You Need a Separate Merchant Account for Each E-Commerce Website

The issue of accepting credit cards by one business on multiple websites is one that keeps popping up in our conversations with merchants. The majority, although by no means all, of those who contact us prefer having a single merchant account for all of their websites. It would be simpler and much easier to manage, if there were only one account to deal with, they would tell us.

However, one merchant account for multiple e-commerce websites is not the right set-up and in this article I will explain why.

What Is a Merchant Account?

First, though, let’s take a look at exactly what a merchant account is, how it is set up and how processors determine risk and transaction rates.

Merchant account is the generic name of the service, provided by payment processing companies, that enables businesses and non-profit organizations to accept electronic payments.

Credit Card Processing Risk

So far, so straightforward. However, not all businesses look the same to a processor. Some of them are riskier to process credit card payments for than others. The level of processing risk is determined mostly based on the product or service being sold and the payment acceptance setting (face-to-face or not).

Based on these factors, applicants are placed into one of several (typically five) risk categories. The lowest two risk categories are the domain of face-to-face operations. Non-face-to-face payment acceptance by itself is enough to place a business in a high-risk category. Then, if you sell products that historically have generated high rates of customer disputes and chargebacks, your risk level will be raised further and you will be asked for additional documentation to prove that you can adequately manage the associated risk. Finally, if you operate in one of an ever increasing number of industries, you will not be approved for a merchant account.

So how does all this relate to accepting payments on multiple websites?

3 Reasons You Need a Separate Merchant Account for Each Website

Well, risk has everything to do with merchant account underwriting and set-up. Here are the three major reasons why you should have a dedicated account for each individual website:

• Damage containment. If you had one merchant account for all of your websites and one of them was generating higher rates of customer disputes and chargebacks, that would affect all of the others. If chargebacks reach excessive levels, the account will be closed and you will not be able to accept payments on any of your websites. That would not have been the case with dedicated accounts.
• Pricing considerations. With a single account, you would have one pricing for all websites. With dedicated accounts, on the other hand, you could negotiate the processing rates for each one of your sites and might be able to get better pricing for your lower-risk operations.
• Tracking sales. With a single merchant account, tracking sales for each individual website could be difficult and time consuming.

So, to conclude, if you operate several e-commerce websites, you should set up a dedicated merchant account for each one of them, even if they all sell the same products. Yes, you will be paying monthly fees for each individual account (although at UniBul Merchant Services we charge no fixed fees), but the advantages far outweigh the additional costs.

Image credit: Ignite360.com.