Working And Types Of Merchant Account

If you have a small business are often looking to expand, obtaining a merchant account may be the way to go. A merchant account enables you to access accept credit cards for payment. A merchant account can be opened through a bank that is a member of at least three of the major credit card networks (Visa, MasterCard, etc.).

Retail accounts are what they sound like. Most people have likely used them in the past. When they shop at a retailer, weather it be for food or building supplies, and they pay with a debit or credit card, they have used the retailer’s merchant account. When the consumer swiped the card through the reader, the machine processed the credit card transaction with the card association, and then acquired authorization from the issuing bank. When it is accepted by 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.

How it Works:

 When a merchant accepts a customer's payment information, it is transmitted to the merchant bank. The merchant bank then deposits into the merchant's bank account the transaction amount, minus the interchange fees and the processing costs, and submits 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, minus the interchange fees, and posts the transaction on the cardholder's monthly statement. At the end of the month the cardholder pays the issuing bank to close the cycle.

Merchant Accounts types based on whether or not the card was obtainable at the time the payment was processed; there are several merchant account types:

•           Card-Present Merchant Accounts. This type of merchant account services include 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. Because the merchant is in fully 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. Includes in this group is all payment processing services where the card information is physically entered into the merchant bank's scheme, using a web browser or a telephone keypad. The card itself is absent (hence, card-not-present). Because the merchant is seldom 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 three distinct sub-groups here:

o    ECommerce Merchant Accounts:  These merchant accounts are used by web-based merchants and enable consumers to enter their payment card information into a payment form on the merchant's website. Three times submitted, the payment details are automatically transmitted, via a payment gateway, to the merchant bank.

o    Mail Order and Telephone Order Merchant Accounts:  Also known as MO/TO merchant accounts, these payment processing solutions enable merchants to enter the payment information 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 technique.

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