Key: Merchant Account for Social Commerce
Social Commerce integrated payment processing platform requires a banking merchant processing account for businesses that wish to sell directly to consumers right on the social platforms. Why is the merchant account key to this? Let's exlore the use and the need for merchant accounts for credit card processing.
As social Commerce refers to selling goods and services directly within social media platforms, businesses need to accept any type of electronic payment – credit card, debit card, gift card. To do this businesses need a merchant account as well as a business bank account. There is also payment processing services third party processing what is known as a payment facilitator service, or Payfac. With this service, all merchants are boarded under one main merchant account, such as PayPal, Square, or Stripe – but this has many disadvantages such as higher transaction fees, higher costs, longer periods for a business waiting to get paid for its sales, very limited customer service, and a few other inconveniences. It is well known that PayPal is one of the most hated customer service companies as it blocks accounts for no fault of businesses, keeps their sales for 6 month to a year, for reasons of chargeback or any reason they see fit.
By comparison, instead of getting PayPal or a third-party processing, by far majority of buinesses get a merchant account from a bank or merchant service company. This offers an all-in-one merchant account that takes care of payment processing, hardware, and support which costs a lot less and offers flexibility with social commerce payment processing.
Merchant Accounts
Merchant account is an account provided by a merchant bank (also called Acquirer) to businesses and companies (merchants) for the purpose of accepting credit card payments from their customers for goods and services sold. Merchant accounts are not a bank account as such, i.e. you do not deposit money and withdraw money or write checks from its funds.
The "merchant account" in reality is an underwritting account providing a risk-based credit card transaction payment transfer which allows a merchant to receive their money within a couple of days while the bank will take care of cardholder payment receipt and settlement.
Without this service provided by merhcant banks, the merchant would have to wait for payment clearence just like they would for a check, and if the fund is not available, then they have to pursue the customer for payment. The merchant bank takes care of all the clearing of funds and final settlement between the cardholder and the merchant bank. For this service, the merchant bank charges a "discount rate", or a fee of approximately 2% (1.5%-2.2% depending on the rist associated to the way the order was processed and where it was processed, (in person or online).
Merchant Accounts Discount Rates
As mentioned above, merchant account discount rates are approximately about 2%. Some banks offer slightly lower rates but higher fees, such as transaction fee per order. Some merchants banks offer a wholesale rate to merchant account providers (which add a few basis points to the rate) so the final discount rate for your merchant account would amount to 2.2% or 2.3%.
Some merchant account providers are ISO's, or Independent Sales Organizations. Those merchant accounts have discount rates of 2.6% and the ISO keeps the portion of the merchant account discounts for every order although in reality they provide no real service.
Some may offer support services and work as a liason between you and the merchant bank. Sometimes this is a major problem since if you have an issue with your merchant account, you have to wait for the ISO to contact the merchant bank and this delays getting service promptly.
Merchant account fees
There are normally quite a few different types of fees associated to merchant accounts such as per transction (per order) transaction fee of approximately 15 cents, or monthly fees, or even account fees. Some ISO and agents charge all their fees by adding to the transaction fee and hence why you would pay about 45 cents per every order.
Most common and realistic transaction fees are about 15-25 cents. If your merchant account provider is suggesting that you pay higher, negotiate that down without any adjustment to other fees. Or simply go direct to the merchant banks and bypass the agents and their fees.
There is a monthly service fee associated to almost all merchant accounts. Usually there is a minimum charge of $15 per month if you do not process any transactions through your merchant account for that specific month. This only really effects you if you process less than $750 in that month ($750 x 2% = $15), i.e. if you process more than $750 on a say discount rate of 2%, then your fee would be $15 which covers the minimum. Above $750 in sales per month, you simple have no minimum.
There are other fees depending on whether you process a corporate credit card or if you cannot process a credit card with Address Verification and sometimes your rates also increase as a result of processing a foreign transaction. Please consult with your merchant account provider or merchant bank to get a list of all the merchant account fees that apply to the type of merchant account you need.
- Merchant accounts are a critical part of modern business, where accepting debit and credit card payments is a basic necessity.
Here at Payment Online, we continue to offer dynamic and innovative payment processing solutions for businesses by working with merchant account banks and global credit card merchant banking that offer $0 fee merchant accounts, these are becoming popular and the fees are passed on to consumers at the time of the purchase when transactions are being processed.
Rise of Social Commerce
The idea of browsing and shopping directly on social media platforms sounds brilliant to almost every marketer in the world as this new dynamic in digital commere seems an inevitability.
Recently a 2-hour live streeming shopping event on TikTok generated more revenue for a brand than a week long "specials" sale, and yet in another event an interactive, shoppable Instagram live stream generated 40,000 engagements. Augmented-reality (AR) lenses let Snapchat users “try on” makeup and send the images to friends and they can purchase combos and packages together and share pieces or gift them..
Malls use to allow consumers explore products with friends, in social and relaxing environments. Now buyers can browse and complete transactions through social media and content creation platforms, all in an app, which creates a more engaging and entertaining process for consumers, and presents new opportunities for brands to generate sales.
Social commerce is a rapidly growing segment in the United States. Back in 2021, $37 billion in goods and services were purchased through social-commerce channels. However by 2025, thais figure is expected to grow to as high as $80 billion, or 5 percent of total US eCommerce and globally, it is expected to grow to more than $2 trillion by 2025.
This indeed represents a paradigm shift in how consumers interact with brands and buy from them.
Today in many ways, social platforms are filling the role that the mall or city center used to fill: one location where you can socialize, network, shop and be entertained.
And this trend is expected to further gain influence if the metaverse reaches broad adoption.
The takeaway? Today's customers want to buy their products where they do everything else, and they will vote with their wallets for companies that help them do that.
The rise of Social Commerce, where social media platforms serve as marketplaces, has been a significant trend in recent years, and it's akin to the traditional role that malls or city centers used to play.
Among millennials, Gen X-Y-Z, social platforms are filling this of malls for many reasons, including:
1. Social Commerce Platforms offer easy interface to all businesses
Social media platforms like Facebook, Instagram, and Pinterest have integrated eCommerce features directly into their interfaces. Businesses can set up online shops, showcase their products, and facilitate transactions, all within the social platform. This seamless integration encourages impulse buying and simplifies the purchasing process for users.
2. Influencer Marketing itself is very social like hanging out at the mall
Influencers on social media platforms act as modern-day brand ambassadors. They can influence their followers' purchasing decisions significantly. By partnering with influencers, businesses can reach a wider audience and build trust, similar to how shoppers might trust the recommendation of a friend or a knowledgeable salesperson in a physical store.
3. User-Generated Content are accessible to much wider audiences (even globally)
Social platforms allow users to create and share content related to products and services. This user-generated content, such as reviews, unboxing videos, and testimonials, serves as social proof. Potential buyers are more likely to trust the experiences of their peers, which can drive purchasing decisions.
4. Interactive Shopping Experiences, thanks to new technology & virtual reality
Live streaming, augmented reality (AR), and virtual reality (VR) technologies are being integrated into social commerce. These technologies allow customers to have interactive and immersive shopping experiences. For instance, they can virtually try on clothes or see how furniture fits into their homes before making a purchase decision.
5. Community Building (even more 'social' than malls)
Social media platforms enable businesses to create communities around their products or services. These communities foster engagement, loyalty, and a sense of belonging among customers. Communities can provide valuable feedback to businesses and encourage repeat purchases.
6. Data-Driven Personalization (tailored shopping)
Social platforms gather vast amounts of data about user preferences and behaviors. This data can be utilized to personalize product recommendations and advertisements, creating a tailored shopping experience for each user. Personalization enhances user engagement and increases the likelihood of conversions.
7. Seamless Mobile Shopping including integrated payment systems
As a significant portion of social media usage occurs on mobile devices, social commerce ensures a seamless shopping experience on smartphones and tablets. Mobile-friendly interfaces and quick, one-click purchasing options make shopping convenient and accessible.
8. Instant Customer Support with live social media interface
Social platforms facilitate real-time communication between businesses and customers. Users can ask questions, seek recommendations, and resolve issues instantly. This instant customer support mimics the in-person assistance one might receive in a physical store.
9. Global Reach, instead local mall constraints
Social eCommerce provides businesses with the opportunity to reach a global audience without the need for physical presence in multiple locations. This global reach opens up new market opportunities and customer bases.
Social Commerce has transformed the way people shop online by recreating the social and interactive aspects of traditional retail environments in the digital realm. Businesses that effectively leverage social media platforms can create engaging, personalized, and convenient shopping experiences, leading to increased sales and customer loyalty. Social commerce and content creation platforms is new secret marketing weapon that lets brand marketers deliver significant growth for their products while engaging consumers in a cost-effective way.
Social Commerce
Social Commerce integrated payment processing platform, by Payment Online, is the fasted growing service and the most popular, in the company.
Social Commerce refers to selling goods and services directly within social media platforms whereby businesses and companies incorporate social media into the eCommerce experience to give shoppers real customer recommendations, created by real users, and provide customers with convenience while giving businesses the means to perform branding and create brand credibility through other shoppers and previous buyers.
The recent explosion of social commerce is a stark reminder that shopping has always been a social experience.
This allows the entire process of online shopping to become more convenient, and flexible.
The future of social ecommerce, live shopping and integrated payment processing will be characterized by immersive technologies, personalization, increased convenience, enhanced security measures, and a focus on consumer on-demand delivery.
As technology continues to advance, businesses will need to adapt and innovate to meet the changing demands and preferences of consumers.
Social eCommerce is being built on dynamic and innovative interaction with the consumers driven by advancements in technology, such as Augmented Reality and Virtual Reality, and Integration where users can browse products in a virtual store, enhancing the feeling of being in a physical store.
There will also be enhanced live streaming where viewers can directly purchase products.
This will go hand in hand with Increased use of digital wallets and mobile payment apps for quick and secure transactions, Cryptocurrency Payments as a form of payment. To accomplish this level of security, platforms will be offering decentralization and security, Biometric Authentication of data such as fingerprint, facial recognition for secure and convenient payment authorization.
However, industry leaders do agree the first of all these benefits to be implemented, which consumers have been asking for quite aggressively, is the expansion of same-day or even within-the-hour delivery services in densely populated areas, meeting the demand for instant and automated fulfillment centers placed closer to consumers, reducing delivery times and costs.
Together, these are some of trends and possibilities that will shape the future of social ecommerce and payment processing in the next few years.
Here at Payment Online, we continue to offer dynamic and innovative payment processing solutions for businesses and individuals that wish to explore new possibilities and opportunities.