In order to do that, it's important to clarify the terminology. The term merchant account provider, or MAP, is used loosely in the e-commerce world. It can refer to providers of merchant accounts but not payment processing, such as banks; providers of merchant accounts and online credit card processing, such as independent sales organizations (ISOs); and providers of online credit card processing that refer customers to merchant account providers on request, such as credit card processors.

Basically, the term refers to any service that will verify the credit card, process the transaction, and deposit the results into your account. The terms MAP, ISO and merchant service provider (MSP) often are used interchangeably, adding to the general confusion. However, while the terms are similar, services and fees among these providers can vary considerably. Focus on the facts and forget the terms -- you'll fare much better.

Banks

When you're ready to open a merchant account, the best place to start is with your local bank. If your business is less than 2 years old, you still should be able to establish a merchant account, provided you have a history, either business or personal, with that institution.

Generally, banks are viewed as the most secure and reliable option, but they also are more selective. Their rules often require that they limit the number of merchant accounts given to high-risk businesses. Since e-commerce businesses are generally considered high-risk by the card associations and by banks, some banks do not offer Internet merchant accounts. If they do, they may charge higher fees. Shop around to give yourself some leveraging power. If you locate lower fees elsewhere and present the discovery to your bank, your bank might agree to lower its charges just to keep your business.

Once you open a merchant account, the bank arranges a third-party processor to set up a mechanism for accepting credit card payments. U.S. Bank, for example, uses CyberCash, a company that offers Web-based payment-processing software. The merchant downloads this software directly from CyberCash, and is given the option to buy the software or lease it on a monthly basis. This is typical of many bank merchant account arrangements.

Drawbacks to consider: The time and involvement that may be required for software or equipment installation is something to keep in mind. You may wish instead to choose another provider type that consolidates this process. Also, banks usually have stricter chargeback policies than ISOs. Chargebacks include disputed charges and fraudulent charges.

According to Tim Mahan of Merchant Card Services, banks tend to shut down merchant accounts as a result of chargebacks without first working with the merchant to reduce the chargebacks. ISOs usually will offer advice and customer support to the merchant before they terminate an account.

Independent Sales Organizations

Most ISOs offer merchant accounts and the ability to process online credit card transactions in exchange for a transaction fee and a percentage of sales. Unlike banks, ISOs are generally more tolerant of high-risk accounts because they are not monitored or as tightly regulated. In fact, much of their business comes from companies that cannot obtain merchant accounts from banks directly.

Some ISOs are very reputable; some are not. Be especially wary of ISOs that do not require you to open a merchant account. This may be a sign of factoring -- also known as laundering -- in which you process your orders through a merchant account in the ISO's name rather than your own, usually for an exorbitant fee.

Factoring is prohibited by card associations and is illegal in some areas. Not surprisingly, you may have problems gaining access to your money if you have an arrangement like this and disputes arise between you and the ISO.

Look out for suspicious rates. Complaints regarding ISO practices are on the rise. Some ISOs advertise extremely low discount rates in order to get your business then tack on undisclosed fees or increase rates without warning. Be wary when you see very low rates. If something looks too good to be true, it probably is.

Check for a seal of approval. Look for sites that carry the Better Business Bureau Reliability Seal. ISOs must meet specific standards to use this seal. While sites that don't carry it aren't necessarily fraudulent, its presence can be a good way to determine whether a company is legitimate.

Merchant Service Providers

The term MSP refers to banks, ISOs, or other institutions that offer financial transaction processing, usually related to credit card sales. Many MSPs provide merchant accounts; others require customers to establish them independently.

Credit Card Processors

These companies are responsible for processing the credit card transactions -- verifying, approving then transferring funds securely from one bank to another. They are not considered MAPs per se, as they do not provide merchant accounts. Instead, they form relationships with banks and ISOs to integrate payment processing with merchant accounts. For example, many ISOs use the services of the credit card processors CyberCash and Authorize.NET.

If you establish a merchant account through a bank directly, you might need to choose between a number of third-party processors. If this is the case, consider the cost of convenience. Some companies require you to lease or purchase their equipment and process orders by hand. Others, like Authorize.net, offer instant verification and processing via the Web. It's all a matter of business needs and what you're willing to spend.

Real-time services can be more expensive, but with all the software and information residing on the third-party processor's server, the merchant has no hardware or software issues to worry about, which streamlines the process. This is another area in which to do your homework. Some credit card processors require extensive modifications to your site, possibly including programming code.

Finding a merchant account provider and/or a credit card processor for your e-business can be confusing, given the flood of them on the market. Your local bank might be your best bet, but if you get turned down, keep looking and ask a lot of questions, particularly when it comes to fees and rates. Your efforts will pay off, as there are affordable and high-quality options available for getting set up to receive credit card payments on your Web site.