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Merchant Account
Merchant Account is an integrated method for authorizing, processing and settling transactions that are paid by credit card.
When your customer chooses to pay by credit card, the credit card reader scans their card. At the end of the day, information is transmitted to the bank through the Merchant Account Service provided by the bank. The bank then secures the funds and makes the appropriate transfers to your bank. While the actual transmission of the batch takes just a few minutes, the bank processing can take several business days. Therefore, it is important that the batch be sent the same day the authorization takes place to avoid penalties.
A regular Merchant Account is an account set up between a retail company and a merchant bank which allows the retailer to accept a credit card order from a customer, and in turn receive the monies through the bank. If you wish to accept credit cards online in your own company name you will need your own merchant account.
There are three, separate types of Merchant Account: retail, MOTO (mail order - telephone order), and Internet. The major differences between these types of accounts are the transaction fees charged and the rules associated with the use of the account. It is not unusual for a business to have more than one merchant account, each of a different type.
Retail Merchant Account: Retail Merchant Account offers the lowest transaction fees and has the most restrictive rules associated with them. Retail Merchant Account require that a very high percentage (usually 70% or more) of credit card sales be conducted with the "card present" and that the card be "swiped" by passing it through a physical credit card terminal. Retail accounts are associated with "brick-and-mortar" businesses such as restaurants, hotels, and grocery stores.
MOTO Merchant Account: MOTO or Mail Order - Telephone Order accounts are processed at a higher transaction rate compared to retail accounts and are used when credit cards cannot be physically swiped. MOTO accounts were originally created to address the credit card processing needs of mail order companies who receive all of their sales by mail or telephone.
Merchants that have a MOTO Merchant Account usually process credit card payments by entering the credit card information directly into a terminal that contains a keypad, by using terminal software installed on a personal computer, or by using a "virtual" terminal that allows the merchant to use a normal Web browser to process transactions on a payment service provider's Web site.
Internet Merchant Account: Internet accounts are very similar in cost and rules of usage as the MOTO account. While many banks issue a MOTO merchant account to businesses conducting transactions over the Internet, some banks have started creating a separate Internet Merchant Account type, to address the unique needs associated with this type of credit card transaction.
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