Merchant Account Overview & Types of Businesses

Posted by on Jun 1, 2014 in Blog, Credit Card Processing, Payment Processing | 0 comments

Both online and offline business transactions have taken a sharp focus worldwide with firms finding it necessary to process credit cards for convenient sales.

But for credit cards to be processed, one must get a special type of account called, credit merchant account. This type of account allows business to accept payments by credit cards, payment cards or debit for services and goods offered.
It is more of a contract between the bank and business owner where rules defining how products will be sold, bought or paid for are set. The agreements therefore remain binding without any violation from the account holder.


Three Common Types of Merchant Accounts

  1. Retail Merchant Account
  2. Moto Merchant Account
  3. Internet / eCommerce Account


Retail merchant accounts: This account has very restrictive rules but at the same time provides the lowest transaction fee. It requires that when transacting credit card sales the card must be present and be proved by physically passing it on a credit card terminal or point of sale system via a card reader.

These accounts are usually used in businesses such as restaurants, shops and grocery stores. It is convenient for merchants who have no future plans of conducting business online or through mail at any point.

MOTO merchant accounts: This account is also known as Mail Order / Telephone Order and charges a relatively high transaction rate than retail. It is used when credit cards cannot be swiped physically.

For merchants to process their credit card payment transactions through a Moto account, they typically need to key in their credit card information through a web browser or into a terminal installed on a personal computer.

Internet merchant accounts: These are similar to Mail Order accounts in that the card is not present during the transaction. With internet accounts specifically card payments are used for online transactions only. Merchants’ utizlie a virtual terminal, gateway, shopping cart or other payment software to transact credit card payments.

While there are many payment service providers, it is important to work with the right merchant account depending on the type of business you will be operating.


Five Steps to Take When Getting a Merchant Account

1.) After evaluating how you will conduct your business or what your business will look like, you should proceed to select the right type of merchant account that suits the services of your business.

2.) Evaluate the potential risks of your business. With background knowledge that some merchant account applications are rejected because the business type represents high credit card risk, decide on the type of processor you will need to apply with.

3.) Evaluate the number of refunds you have had while you were processing during the life of your business. Have an annual based table which will assist you to monitor the trends. Check if the number of repayments decreased or increased over time. Have a summary of these results in your application.

4.) Consult with various representatives from institutions that offer merchant services and find out how long a business has to be in operation before they can approve an account.

5.) To deal with credit card fraud, have in place options you can implement for the safety of your business. Have online security services that will ensure your business is safe from fraud.

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