What Is A Merchant Account

What Is A Merchant Account

What is​ a​ Merchant Account?
Merchant accounts are bank accounts that make it​ possible for​ a​ business to​ accept a​ credit card and/or a​ debit card as​ payment .​
While the​ accounts are offered through ordinary banks, they are not the​ same as​ the​ checking or​ savings account you have with your local bank .​
a​ merchant account is​ more like a​ contract between the​ bank providing the​ account and​ the​ business owner, with rules about how products or​ services are sold and​ paid for.
There are two types of​ merchant accounts a​ business owner can apply for​ .​
One is​ called an​ Over the​ Counter (OTC) merchant account, and​ the​ other a​ Money-Order/ Telephone-Order (MOTO) merchant account .​
the​ over the​ counter account is​ what a​ typical retail merchant has, and​ the​ fees for​ transactions are lower than the​ MOTO merchant account fees because in​ a​ retail establishment, the​ credit cards are physically swiped through a​ machine to​ make the​ transaction, while the​ Money-Order/Telephone Order merchant accounts charge higher fees due to​ the​ need to​ take two steps to​ process a​ card rather than just one and​ a​ higher risk of​ fraud.
An Internet based business will typically require a​ Money Order/Telephone Order merchant account .​
the​ customer enters all of​ their credit card information into a​ form on a​ website, where the​ data is​ then sent out for​ verification and​ the​ money is​ subtracted out of​ the​ cardholder's limit .​
In some cases the​ card is​ not actually charged at​ this stage, however .​
the​ money is​ placed in​ a​ holding account, and​ when the​ product ships out the​ card is​ charged for​ the​ purchase price.
Many people are lead to​ believe that it​ is​ hard to​ get accepted for​ a​ merchant account, particularly for​ a​ newly established business .​
This is​ not the​ case however, with many merchant account providers offering as​ high as​ 98% acceptance rates of​ applicants .​

It's also common to​ believe that having the​ ability to​ accept credit card payments is​ too expensive for​ the​ average small business owner .​
With some banks, it​ may be too expensive as​ they may charge you an​ annual fee in​ addition to​ per transaction fees- but there are numerous providers that only charge you a​ small percentage of​ the​ sale amount when you process a​ credit card- an​ average of​ just 2-3% per transaction is​ paid to​ the​ merchant account provider .​
These merchant account providers are ideal for​ small business owners and​ online businesses that may only need to​ process a​ handful of​ cards each week.
The success of​ an​ ecommerce business relies on the​ ability to​ accept credit cards .​
It has been found that websites that only accept payments through bank accounts or​ by mailing check or​ money order do not have sales as​ high as​ competitors in​ the​ same industry- people want to​ be able to​ shop using their credit cards in​ a​ secure environment online and​ not have to​ mail a​ check or​ wait for​ payment to​ clear before their items are shipped .​
It's also been found that the​ average consumer will spend more when they are able to​ shop using their credit cards .​
Another advantage of​ having a​ merchant account for​ the​ consumers, is​ that it​ gives them the​ opportunity to​ use their debit cards (with the​ MasterCard or​ Visa logo) to​ shop online or​ in​ retail establishments, and​ deduct the​ money from their checking accounts without having to​ pay interest or​ card fees, but with the​ convenience of​ paying with a​ card over cash or​ writing an​ actual check.

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