How Internet Merchant Accounts Work in South Africa

What is an Internet Merchant Account?

A standard Merchant Account is a facility established by a bank which enables a company to route money from credit card sales to an account which holds it before transferring it to the business’ own account.

Any business which wishes to accept credit card payments must therefore have a merchant account. Depending on the merchant account, money can be transferred into the standard business account in real time or during various points in a 24 hour period.

An Internet Merchant Account, or “card not present merchant account,” is similar to a standard Merchant Account with the added benefits of enabling businesses to accept credit card payments over the Internet and to fully automate ecommerce transactions. An Internet Merchant Account is therefore a crucial part of the ecommerce process.

The components of an Internet Merchant Account

In order to use a Merchant Account to accept credit card payments through a website, a few interlinked components are required.

  1. The Payment Gateway. This is what allows the business to accept a customer’s unique billing information (i.e. credit card information), which is used to initiate the payment process.
  2. The Internet Merchant Account. This is what allows the business to accept the credit card payment online and process it via a financial institution or bank.
  3. The Website. The website needs to be fully integrated with the payment service provider to ensure a seamless customer experience.

Getting an Internet Merchant Account

South Africa’s top four banks (Standard Bank, Nedbank, ABSA and FNB) all offer Internet Merchant Accounts. A merchant can therefore apply for an Internet Merchant Account directly with their bank. However, it is advisable to do some comparison shopping among the banks to determine which ones offer the best rates and fees.

Alternatively, a merchant can use a Merchant Services Provider, such as Swift Merchant Services, who can often offer the best merchant rate. Merchant Service Providers are independent organisations that work with multiple banks. They will streamline the process and set merchants up with both an (Internet) Merchant Account and a Payment Gateway.

Why use a Merchant Services Provider?

Merchant Services Providers offer added benefits, such as easy application processes with high approval rates. Also, their existing relationships with payment gateways and point of sale companies enable them to offer merchants the best merchant rates and can help merchants decide on the best card processing solutions for their business needs.