When you’re new to retail, you want to give your business room to grow. Traditional retail limits local foot traffic, involves high real estate costs, and requires employees to be present during business hours, all of which can hinder growth. Moving to a virtual merchant model allows you to get rid of these obstacles and increase customer satisfaction.
Take enterprise as an example whole bird and lustera company that has grown from a small startup to a retail giant by adopting a virtual merchant approach that allows them to reach customers around the world. But running a virtual merchant business requires some forethought, especially keeping customer data Be safe when processing online transactions.
What is a virtual merchant?
A virtual merchant is someone who sells products or services online online storeproviding customers with a safe online payment method. Virtual Merchant Services connect your business with security payment processor This allows you to accept credit cards and process transactions through your website.
To operate as a virtual merchant, work with a virtual merchant provider to set up a merchant account – a business account for payments and credit card processing. This allows you to accept payments in a secure way payment gateway. Your merchant service provider handles all payment processing automatically and takes a small percentage of each transaction (usually 2% to 3%), similar to how credit card payments are processed in brick-and-mortar stores.
This method is becoming increasingly popular among business owners who want to reach customers outside their local area. It offers the flexibility to sell products 24/7 without the overhead and limited operating hours of a physical storefront.
How does a merchant account work?
one merchant account is a dedicated bank account that allows you to accept and process electronic payments from your customers. When customers make a purchase, their payment information is sent via security gateway to verify funds. The virtual merchant provider then processes the transaction and temporarily holds the funds in your merchant account before automatically transferring them to your business bank account. This usually occurs within one to two business days, minus any processing fees.
To get a merchant account, you’ll need to apply through a payment processor or bank, who will evaluate your business type, sales volume, and credit history before approval. Many businesses choose all-in-one platforms, e.g. Shoppingwhich bundles merchant accounts, payment gateways, and online store tools.
Here are the key elements for online businesses to process payments:
- Payment gateway. A secure system that encrypts and transmits transaction data between merchants and card issuers.
- Virtual terminal. A web-based tool that allows merchants to manually process payments for phone orders.
- Payment processor. A service that handles the movement of funds between customer and merchant accounts.
- Point of Sale (POS). Physical hardware or software that processes payments in the field, working with online systems for unified sales tracking.
Virtual merchant security
For online stores, security is not just a feature, but an essential element. When you handle payments and sensitive customer information, a data breach can destroy your business and undermine customer trust.
That’s why modern virtual terminals employ multiple security measures to protect every transaction, from the moment a customer starts ordering online until payment clears.
Here are some key security measures used by virtual merchants:
- Multiple firewalls. These digital barriers create multiple layers of protection around your payment system, blocking unauthorized access attempts before they reach sensitive data.
- Data encryption. The software scrambles each payment information into unreadable code during transmission, making it useless to potential thieves.
- Tokenization. The system does not store the actual card number, but instead uses a unique token to represent the payment data, adding an extra layer of protection.
- SSL certificate. These digital credentials create a secure connection between the customer’s browser and your payment system, verifying the legitimacy of your website.
- Fraud detection software. Smart algorithms constantly monitor suspicious patterns in transactions and instantly flag potential threats. For example, Shopify’s Fraud Control App Monitor risk levels, track chargebacks, and analyze order patterns to help merchants stop suspicious transactions.
- Payment Card Industry (PCI) compliance standards. These industry-wide security rules set the baseline for how businesses must protect card data. All Shopify stores have built-in PCI DSS Level 1 Compliancewhich meets the highest security standards for protecting critical PCI class payment data, such as protecting network systems and implementing strong access controls.
Virtual Merchant FAQs
Are virtual merchants safe?
When virtual merchants use industry standard protection measures such as PCI compliancedata encryption and fraud monitoring tools. This level of security depends on your ability to choose a reputable platform and follow security best practices.
What is an example of a virtual merchant?
Warby Parker It operates as a virtual merchant, selling eyewear through its website while maintaining physical retail stores.
What does a virtual merchant do?
As a virtual merchant, a business sells products or services through its website, processes customer payments digitally, and processes orders and services. implement Online – is this the only sales channels or part of a wider retail strategy.
