Easy Merchant Account Guide

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Author: Zabel1

When you open a merchant account, you take a serious step toward making your business more productive and more profitable. And you also take a step toward growing your customer base. But depending upon the type of business you run and the type of payment options you use, your merchant account options can vary. As more and more business owners embrace the flexibility, convenience and other benefits offered by accepting credit cards as a valid form of payment, merchant account service providers have expanded their offerings to ensure credit card processing solutions are available to nearly every type of business imaginable.

While traditional retail accounts are the most familiar of all merchant accounts, in fact there are a variety of types of account services designed to meet the specific needs of different types of businesses. The following list will introduce you to some of the types of accounts that are offered and explain the differences among accounts, helping you to identify which type or types of accounts are best for your unique business needs.

Retail Merchant Accounts

Retail merchant accounts are perhaps the most common merchant accounts. Unlike virtual accounts such as Internet or wireless merchant accounts, retail merchant accounts rely on physical terminals to process each transaction. In the most familiar scenario, cards are “swiped” through a tabletop card reader, which transmits the card information to the credit card issuer, which in turn responds with a code indicating the transaction has been accepted or denied. Generally, retail merchant accounts are associated with the lowest fees, since these transactions require face-to-face contact between the merchant and customer and the risk of fraud is less than with other accounts. Retail merchant accounts also typically have the fewest restrictions.

Internet Merchant Accounts

Designed specifically to address the needs of businesses operating wholly or partly online, these accounts can enable you to accept credit card payments from any customer with an Internet connection. One of the fastest growing types of merchant accounts, Internet merchant accounts, join mobile merchant accounts as the “new” kids on the block. While a traditional retail merchant account uses the familiar credit card machines, an Internet merchant account typically does not rely on machines to process cards. Rather, it uses a virtual terminal or gateway (sometimes referred to as a weblink) to accept, verify, authorize and process credit card transactions. Generally speaking, a virtual terminal is a good choice only for businesses with a small volume of business, like some specialty shops, since it requires human interaction to review the card information. By comparison, a gateway is fully automatic and is a good choice for businesses expecting a large volume of sales. Like some other merchant accounts, notably mail order and telephone (MOTO) and wireless merchant accounts, the Internet account relies on AVS to ensure the address on an online order matches the address associated with the credit card. The gateway or virtual terminal connects to the card issuer to confirm account information before approving or authorizing payment. Once the connection is made, both the merchant and the customer are notified if the transaction has been approved or denied. In some cases, the gateway or virtual terminal may also handle the automatic processing of each day’s credit card transactions, facilitating the transfer of cash garnered from the day’s sales into the associated business bank account. Fees for these accounts are usually higher than those associated with traditional retail accounts, due to the higher risk of fraud during online transactions when the customer remains relatively anonymous.

MOTO (mail order and telephone) Merchant Accounts

These merchant accounts comprise services tailored to meet the needs of businesses that accept orders and do business via mail order and telephone. MOTO accounts are also associated with a higher risk of fraud than are traditional retail accounts, and so generally have higher transaction fees to mitigate risk.

Wireless Merchant Accounts

Like Internet merchant accounts, wireless merchant accounts are a relatively new type of account, geared toward serving businesses that want to accept credit card payments via cell phones and other mobile devices. These accounts are ideal solutions for salesmen and trades people who conduct business from a wide number of locations, and are being rapidly embraced by contractors such as plumbers, landscapers, architects, and repair men and women who need to receive payment for their services from clients across a wide area. Merchant accounts are growing in popularity each day as more and more businesses realize the myriad benefits available to those companies that accept credit cards as payment for their goods and services. By carefully considering the ways in which your company is likely to do business, both today and in the near future, you can make sure you have established the type of account that is most likely to suit your needs.

Karen Zabel is a freelance writer who writes about North American Bancard.