Merchant Accounts Explained

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merchant-account-explained-8116717A merchant account is primarily a bank account serviced by a merchant account provider in order for a business to accept and process credit card transactions. The merchant account provider deducts the funds from the customer’s credit or debit card and then transferring the money into the business holder’s account. Generally, there is also an independent processing company involved responsible for processing each credit card transaction on behalf of the bank.

In order for a business to be able to accept a credit or debit card transaction, they must have a merchant account. The majority of merchant account providers require a business to possess a valid business checking account, have good standing credit and be U.S. based. Most providers also require a personal credit check for the business owner and most accounts involve lengthy and exhaustive paperwork due to the high risk of credit card sales. Although it is possible for just about any business, small or large, to obtain an account, the higher the risk, the higher the fees and rates charged. There are non-personal accounts for non-companies and some international providers accept merchant accounts for individuals who are not United States citizens.

Credit or debit card processing transfers information such as the total sale amount, the merchant identification number and the credit card number. However, this would not be possible without merchant accounts or their providers. There are many different types of merchant accounts for a business to choose from and each one is designed to facilitate a particular type of business.

An internet account was designed for businesses that operate exclusively online. There are also MOTO and retail accounts. MOTO accounts are for mail or telephone credit transactions and are similar to internet accounts. Retail accounts are most appropriate for businesses where the customer is present for the transaction.

Merchant accounts can be gained through many different sources. Some banks offer merchant accounts and there are also independent providers as well. It is essential for a business not to go with the first provider they find. There are many providers who have hidden fees and charges that can be detrimental to a new or rapidly-growing company. There are standard fees charged by credit card processing firms, but the amount charged can vary between companies.

There are many benefits for businesses to open and maintain merchant accounts. Although some people prefer cash or checks, the majority of customers use a credit or debit card. Opening up an account allows a business to cater to a much wider range of clientele. Customers are far more likely to shop at a business that accepts credit cards.

Businesses have to keep up with the trends of their customers. Many people rely on credit or debit cards for all of their purchases. It is essential for a business, whether it is just starting out or already established, to continue growing and expanding their customer base. Merchant accounts allow businesses to accept a variety of payments and credit card types which will help increase their bottom line.

Melissa Riley is an up and coming writer for MerchantSeek.