Do Merchant Accounts Really Increase Sales?

The Basics of E-commerce

Business as we know it today is probably a whole different from what our grandparents and great grandparents knew back in the day. One big factor in the evolution of business models is the Internet. With the advent of this technology, it changed the way people did things in different aspects of their lives. More so, when the use of the Internet spread like wildfire jumping from one country to another, there was just no stopping the changes in different sectors.

E-commerce was born out of this. According to the US History Encyclopedia, e-commerce is “is the conduct of business by electronic means. In the twenty-first century, e-commerce referred more specifically to transactions between businesses (B2B e-commerce) and between businesses and consumers (B2C e-commerce) through the use of computer communication, particularly the Internet.” In short, it is the selling of products and services over the Internet.

One big issue that permeates the whole concept of e-commerce is how the merchant is supposed to receive the payment for his goods. Having the advantage of a worldwide pool of clients, e-commerce also has the inconvenience of having clients geographically distant in terms of payment. If not dealt with properly and viable solutions are not offered to the customers, the e-commerce establishment just might not be able to convert web site visits to sales, which in essence is a failure.

The Consumer Mindset

In order to become a success in the world of e-commerce, you should also be able to get into the customer’s heads and determine how they think. Put yourself in their shoes.

For example, you visit this web site selling clothes. You really want to buy several so you proceed to selecting your purchases, placing them in your virtual shopping cart, and then you click the checkout button. How would you feel if you see that your credit card is not accepted by the merchant because he only processes one type of credit card? You would probably be frustrated and upset, to say the least.

It is but logical for consumers to feel and think that way. After all, as a seller, you are after their custom. You want them to feel at home in your virtual store and to keep coming back. As such, one would think that the merchant would go to great lengths to cater to the needs and preferences of his clients, right? This includes providing multiple payment options in order to accommodate the different preferences of clients.

Merchant Accounts =? Increase in Sales

Well we can talk about the essence of e-commerce and the mindset of customers all we want but this is just talk if numbers do not back it up. Fortunately, there have been studies conducted in the past which supports all that has been said in the preceding sections.

According to a study by CyberSource back in 2004, “even the top North American merchants may have untapped potential in their eCommerce practices. According to the data, merchants can convert as many as 20% more customers by offering them more payment types to choose from.” Now we have to qualify this finding in relation to our query of whether or not merchant accounts increase sales. The premise of CyberSource’s study was that the more methods of payment presented, the higher the sales.

Now if a merchant only provides one method of payment – say a 3^rd party processor and then he adds on a merchant account to accept credit cards directly, then indeed his sales would increase. Similarly, if a merchant only accepts Visa and MasterCard and then widens his coverage to include Amex or Diners Club, then his sales would increase as well.

The answer to our query perhaps lies in the play of words. It is not so much the merchant account in itself that opens up the throttle in terms of sales. It is in the number of credit card types that the merchant account can handle. It is in the other modes of payment that a merchant has to offer. The answer then is, yes, merchant accounts really do increase sales, especially if they cover a wide variety of credit card types. Then again, this does not mean that merchant accounts are the only way to increase sales.