Is it just me, or is merchant account processing way more complicated than it needs to be? Take for example, Intuit Merchant Services. If you look on their website at http://payments.intuit.com, you will see the following account options:
- Intuit Online Terminal
- Intuit Go Payment
- Intuit Merchant Service for QuickBooks
- Intuit Merchant Service for Web Stores
- Intuit QuickBooks Point of Sale Merchant Service
- Check Processing Solutions
- Intuit Payment Network
That is 7 different ways to get paid, and this is just one credit card processor! Could they make it any more confusing? Couldn’t they just make it one account with 7 options? Since we are talking about web stores for this article, we will only discuss Intuit Merchant Service for Web Stores and Intuit Merchant Services for QuickBooks. We’ll look at how to integrate these into your eCommerce strategy, and take a look at some other options if Intuit doesn’t fit with your strategy.
In discussing merchant accounts, it is important to clarify the difference between a merchant services account and a payment gateway.
In order to process credit/debit cards, you will need a merchant service account. A merchant service account is a type of bank account that allows businesses to accept payments by debit or credit cards. So a merchant account is an agreement between a retailer, a merchant bank and payment processor for the settlement of credit card and/or debit card transactions. The merchant account is established under an agreement between an acceptor (person accepting the credit card) and a merchant acquiring bank for the settlement of credit card and/or debit card transactions. Whether a merchant enters into a merchant agreement directly with an acquiring bank, or through an aggregator such as PayPal, the agreement binds the merchant to obey the Operating Regulations established by the card brands.
Examples of merchant service providers are Intuit, Bank of America and Wells Fargo. Merchant service providers can offer an actual stand-alone piece of equipment residing at the merchant site where a card can be scanned or the number can be entered into a terminal. They can also work directly within a web site shopping cart. This terminal, or virtual terminal, contacts the card provider through a payment gateway.
A payment gateway is an eCommerce service that authorizes payments for e-businesses and online retailers. This service uses encryption to securely send credit card data to a merchant account provider. It is the equivalent of a physical POS (point-of-sale) terminal located in most retail outlets. A merchant account provider is typically a separate company from the payment gateway. Some merchant account providers have their own payment gateways, but the majority of companies use 3rd party payment gateways. The gateway can work two ways:
- The virtual terminal that can allow for a merchant to securely login and key in credit card numbers.
- The website’s shopping-cart can connect to the gateway via an API (Application Programming Interface) to allow for real time processing from the merchant’s website.
Intuit Merchant Services for Web Stores
I’ve recently discussed shopping carts, so with which shopping carts does Intuit Merchant Services integrate? Actually, only a few. According to the web site, as of this writing, it works with:
So, what if you are using another shopping cart and you want to use your Intuit Merchant Service account? You have a few options:
- Hire someone to develop a custom interface to connect your shopping cart to Intuit Merchant Services. This will require someone with knowledge of the SDK (Software Development Kit) for Intuit Merchant Services. Not an easy task, yet certainly can be done.
- Use a merchant account/payment gateway other than Intuit. The most widely used payment gateway is authorize.net. For a list of merchant service providers that work with authorize.net you’ll want to look at the Authorize.Net reseller directory For compatible shopping carts look at the Authorize.Net Certified Solution Directory. The downside to this option is the lack of QuickBooks integration. However, a third-party application, such as eCC or T-Hub, can integrate with most of the major shopping carts. See our article on shopping carts for more information on this subject.
- If neither of these options work, as a last resort, you can switch shopping carts. This is the least preferred option.
Whichever path you choose, be sure you do your homework and choose the right components to fit your situation. Regardless of which merchant service solution you choose, one of the biggest challenges with merchant accounts and Quickbooks is reconciling your bank account and accounting for the fees.
Merchant Account Reconciliation
Once you have the merchant account setup and your data is flowing into QuickBooks, you still face the tedious chore of reconciling the merchant account payments to your bank account. The biggest advantage to using Intuit Merchant Services for QuickBooks is the built-in tools in QuickBooks and the tight integration. If you are using another merchant service, reconciling your merchant account can be very time-consuming and frustrating. This is mainly due to the fact that a lot of merchant accounts take out their discount fee before depositing your funds into your checking account, so the amount you have in Undeposited Funds never matches up to your deposits. Also, payments processed on one day may show up on the next day’s deposit, making it difficult to match the bank deposits to the actual transactions. Some people simply enter the difference between the sales and actual deposits as the merchant account fee, but this is not a true reconciliation and you run the risk of transactions “falling through the cracks” and not getting all the money you have coming.
Some merchant services providers will do what is referred to as “gross daily settlement”. With this method, the gross sales will be deposited into your account, making it much easier to match to your sales. At the end of the month, they will debit your account for all of the fees in one lump sum. This makes reconciliation much easier, you just need to make sure you leave enough money in your account to cover the fees.
Merchant account reconciliation can be one of the most frustrating aspects of having an eCommerce store. Make sure you develop a system early on and stick to it.