Two general types of credit card merchant account

In order to accept credit card payments either physically or electronically, you need to find a merchant account service provider to process the credit card payment transactions. The serviced offered by the merchant account provider includes a processing solution consists of terms, rates, services and incentives etc that best suits your business. The prime thing to understand before selecting your merchant account is the general types of merchant account available. Learning about the types of merchant account enables you to select the proper type of merchant account suitable for your business.

Merchant account can be classified into two categories:

·         Card present merchant account

·         Card not present merchant account    

The fees and transaction rates are determined by consider a simple rule. Higher fees and charges are implied to those merchant who accept credit and debit cards online. The rates and fees for the merchant who uses a card present merchant account is generally less when compared to those using card not present merchant account.

Card present merchant account – For a card present transaction to take place, it is necessary that the buyer or customer should be physically present, with a credit card. The retailer or merchant then swipes the customer’s credit card in a credit card terminal (It is a magnetic strip reader) which transacts the data of credit card electronically. So, therefore, a card present merchant account holder should own a physical card reader terminal that enables capturing of data of the credit card.

We can sub categorize card present merchant accounts into two:

·         Non portable processing unit

·         Portable processing unit

Most of the retail merchants use non portable processing units. This credit card processing terminals are connected to the modem or telephone line. When the retailer swipes the credit card in the credit card terminal, the data is captured electronically and the authorization is done immediately. When compared to portable processing units, the cost involved is less. Portable processing units may or may not process real time or immediate authorization. Even if they do, the hardware costs and monthly fees associated are much higher. Retail merchant accounts are the type of merchant accounts which employs a card present merchant account services.

Card not present merchant account – In this kind of merchant account, the merchants accepts credit and debit cards not physically but electronically. The cheapest form of card not present merchant account is the MOTO (mail order or phone merchant account). Another form is internet merchant account. With this form, you can accept credit or debit cards online. Phone merchant account is the newest form of card not present merchant account. Phone merchant account is pretty simple to use as it requires only a mobile phone or a telephone. Hardware cost is not applicable to the phone merchant account holders. The phone merchant account gives you the freedom of mobility and portability to accept the payments.

We have to understand that every business in the world is unique. The main factor to consider before selecting your merchant account service provider is to recognize and understand your business type and needs. Find the perfect type of merchant account and merchant account service provider which will help you in building your business for the future.