Types of Merchant Accounts |
A merchant account enable businesses accept payments in the form of credit cards and debit cards. It can be obtained through a bank, a credit card company, or other payment processor. A merchant account was not so much important a few decades ago when most businesses operated on “cash and carry” basis, but now it is one of the utmost importance for any business that wants to survive in this competitive age. A merchant account makes your business much more visible and potentially profitable and helps you in achieving your goal of increasing sales.
There are four main types of merchant accounts to choose from:
Retail Merchant Accounts: These types of accounts are usually associated with retail storefronts businesses such as restaurants, grocery stores, small hotels and clothing stores. This account is for merchants who don’t plan on conducting business through the mail or online at any point. Generally, these types of accounts process large volumes and are for point of sale (face to face) transactions only. These types of accounts generally feature the lowest rates because the sale is made pesonally. Credit cards of customers can be inspected, swiped and signatures can be matched before you accept payments. This type of account offers minimum scope for fraudulent payments since the credit card and details can be visually inspected.
Wireless: Wireless accounts are in vogue among merchants. They process cards through a wireless terminal or with a card reader attached to a cell phone. This option is a great way for mobile businesses or independent professionals to broaden their customer base by having the ability to accept credit card payments. Also, this could be a beneficial option for restaurants. Customers can swipe their card at the table, cutting down on the possibility of employee fraud.
Internet: Internet merchant accounts are meant for transactions over the Internet i.e. for business owners who have services or products advertised, marketed and sold online. These types of accounts allow customers to enter card information through the website either through a virtual terminal or shopping cart. Then a payment gateway authorizes the transaction. These payment service gateways can are now included with most business web hosting packages, and have custom-designed HTML forms or a shopping cart application. These accounts are similar to MOTO accounts
Phone/ Mail Order: This type of account is for orders that are placed over the phone or through mail order businesses. It is similar to an internet merchant account where credit card is not present at the point of sale. Customers are purchasing from home. You will need some type of equipment, either pc based or a traditional retail terminal. Merchants usually process credit card payments by entering the credit card information directly into a terminal installed on a personal computer, or through a normal Web browser to process transactions on a payment. Telephone Order accounts tend to charge a higher transaction rate.
The main difference between merchant accounts is the costs associated with them. All carry some type of fees. Retail accounts usually carry the lowest fees since there is the least amount of risk involved per transaction. Internet accounts usually carry somewhat higher fees primarily because there is a higher fraud risk as the card is not present at the point of sale. Wireless and phone/mail order usually fall between the two.
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