Features And Types Of Merchant Account

Do you have any small business? Are you looking to expand? If your answer is “yes”, obtaining a merchant account may be the way to go. To accept credit cards for payment, a merchant account enables you. Through a bank that is a member of owning at least one of the major credit card networks (Visa, MasterCard, etc.), a merchant account can be opened.

What are Retail accounts? These are just what they sound like. Most people have likely used them in the past. Weather it be for groceries or building supplies, when they shop at a retailer and they pay with a debit or credit card, they have just used the retailer’s merchant account. After swiping the card by the customer through the reader, the machine processed the credit card transaction with the card association, and then acquired authorization from the issuing bank. After accepting the issuing bank transfers the amount of the purchase to the merchant’s bank, this happens millions of times every day as consumers purchase goods, all over the world.

What it is: A merchant account is a service that involves in payment card processing. Merchant bank provides this service to a merchant. It represents a form of line of credit. The merchant bank extends that credit to the merchant and the merchant allowed by it to accept the card brands that is specified in the payment processing agreement.

How it Works: After accepting customer’s payment information by a merchant, it is transmitted to the merchant bank. The merchant bank then deposits the transaction amount into the merchant's bank account & the interchange fees and the processing costs are deducted, and submit a payment request to the bank that issued the card used to make the purchase. The issuing bank then pays the merchant bank the transaction amount deducts the interchange fees and then posts the transaction on the cardholder's monthly statement. Then the cardholder pays the issuing bank to close the cycle at the end of the month.

Types of Merchant Accounts: On the basis of availability of the card at the time when the payment was processed, there are several merchant account types:

Card-Present Merchant Accounts: all payment processing solutions that use physical payment terminals to read the account information from the magnetic stripe of a card that is swiped through them, such type of service account are known as Card-Present Merchant Accounts. Because the merchant is in actual possession of the card (hence, card-present) as the payment is being made. These merchant accounts are considered less likely to generate fraudulent transactions and enjoy lower processing rates.

Card-not-Present Merchant Accounts: all payment processing services where the card information is manually entered into the merchant bank's system, using a web browser or a telephone keypad. The card itself is absent (hence, card-not-present), are know as Card-not-Present Merchant Accounts. Because the merchant is never in possession of the card and the information is given to him or her. Card-not-present transactions are considered more likely to generate fraudulent activity or processing errors and are processed at higher rates. There are two distinct sub-groups here:

E-Commerce Merchant Accounts: The merchant accounts that are used by web-based merchants and enable consumers to enter their payment card information into a payment form on the merchant's website, are known as E-Commerce Merchant Accounts. Once submitted, the payment details are automatically transmitted to the merchant bank via a payment gateway.

Mail Order and Telephone Order Merchant Accounts: This type of accounts is also known as MO/TO merchant accounts. These payment processing solutions enable merchants that is provided to them by their customers into a form on the merchant bank's payment system's website or, using a telephone keypad, to call it into the merchant bank's system to enter the payment information.

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