Merchant Accounts And Its Types In Details

In today’s world of competition a merchant account can be one of the major key of success. Today most of the customers prefer to pay by credit card and merchant accounts makes this possible. Therefore merchant account is the basic need to expand a business. VISA and MasterCard are the examples of the major credit card network. Most of the banks use this network.

In past retail accounts were used. When a customer buys anything and wants to pay for it using debit or credit card then it is necessary for the merchant to have a merchant account. If he/she fails to provide such a facility to his/her customers then the chances of that customer coming back is very less. When a customer swipes his/card in the merchants swiping machine then the before the transaction is being processed, the authorization is done from the issuing. Once it is accepted the amount is transferred to the merchant’s bank. This process occurs a million times throughout the world.

Working principle of payment:

The customer provides his credit card information to the merchant (may be through his website or telephone). Then that information is given to the merchant bank. After verification the merchant bank deposits the amount and makes a payment request to the customer’s bank.  The merchant bank charges a processing fee every time the merchant accepts any payment. The transaction details are also given to the cardholder’s bank. This continues as a cycle as long as the customer doesn’t clear off the bills at the end of month.

Types of Merchant Accounts:

Base on the physical presence of the credit card or debit card there are mainly two types of accounts.

Card present Merchant accounts: This type of merchant account is capable of processing all types of payment where the card is present physically. There is a swiping machine provided to the merchants. The card information is got from the magnetic stripe present in the card. In this type of case the chance of fraud is very less because the owner of the card is present when the transaction is actually done as a result this cards enjoy low processing rates of the payments that are being made.

Cards not present Merchant accounts: these type merchant accounts include all other type of payment where the physical presence of the card is not required. That is the customers enter their card details sitting at a distant place manually in the merchant bank system using a web browser or telephone. This type of card generate more fraud cases as the merchant cannot see the customer and an internet genius to get information of anyone card by just installing a adware in the system which the customer uses to pay his bills online. There are two types of payment here also:

o    ECommerce Merchant Accounts: This type of payment is used by the web based merchants here the card details are provided by the merchants in a form available at the website itself and this information is forwarded to the merchant bank for processing the payment via a payment gateway.

o    Mail Order and Telephone Order Merchant Accounts: This type of payment, also known as MOTO is used by the merchants who receives the customer’s card details from the user itself by a telephone or email and this information he enters into form of the merchant bank.

   Setup a credit card processing merchant accounts to accept credit cards today!