Types of Merchant Accounts
A merchant account is an account with a bank or any other financial establishment that allows a business owner to accept credit cards or electronic checks through channels that include storefronts with credit card terminals, over the internet via online credit card processing, over the telephone, etc. Depending upon the different channels used, the types of Merchant accounts may be defined.
Broadly speaking, there are three types of merchant accounts- Retail, MOTO (mail order - telephone order), and Internet. A business may have more than one merchant account, and all accounts need not be of the same type. What differentiates the three types of Merchant accounts from one another is the transaction fees charged and the rules associated with the use of the account.
A Merchant account used to process transactions for a particular merchant will depend on the merchant’s business model. This is crucial because the rates and fees are determined on business model classification. Merchant accounts are assessed and evaluated for conformity by a processor’s risk department and credit card associations routinely.
The three types of Merchant accounts are: -
* Retail Merchant Accounts- With the least restrictive rules and minimum transaction fees, retail merchant accounts involve large transactions that are to be conducted physically. In this case the credit card has to be swiped by passing it through a physical credit card terminal. Retail accounts are mostly used by "brick-and-mortar" businesses such as restaurants, hotels, and grocery stores. Since the card is present during the transaction, the rates are lower and there is less risk.
* MOTO (mail order - telephone order) Merchant Accounts- Telephone order accounts are processed in the physical absence of a credit card. Thus, they have a higher transaction rate compared to retail accounts. They were originally created to address the credit card processing needs of mail order companies who receive all of their sales by mail or telephone. Customers are not seen in person and the risk involved is high. So the rates and surcharges are normally high.
* Internet Merchant Accounts- Internet Merchant accounts are similar to MOTO merchant accounts in cost and usage. Internet Merchant accounts address the unique needs associated with online business. The payments are made using a "virtual" terminal or by using a payment service gateway with custom-designed HTML forms or a shopping cart application.
Broadly speaking, there are three types of merchant accounts- Retail, MOTO (mail order - telephone order), and Internet. A business may have more than one merchant account, and all accounts need not be of the same type. What differentiates the three types of Merchant accounts from one another is the transaction fees charged and the rules associated with the use of the account.
A Merchant account used to process transactions for a particular merchant will depend on the merchant’s business model. This is crucial because the rates and fees are determined on business model classification. Merchant accounts are assessed and evaluated for conformity by a processor’s risk department and credit card associations routinely.
The three types of Merchant accounts are: -
* Retail Merchant Accounts- With the least restrictive rules and minimum transaction fees, retail merchant accounts involve large transactions that are to be conducted physically. In this case the credit card has to be swiped by passing it through a physical credit card terminal. Retail accounts are mostly used by "brick-and-mortar" businesses such as restaurants, hotels, and grocery stores. Since the card is present during the transaction, the rates are lower and there is less risk.
* MOTO (mail order - telephone order) Merchant Accounts- Telephone order accounts are processed in the physical absence of a credit card. Thus, they have a higher transaction rate compared to retail accounts. They were originally created to address the credit card processing needs of mail order companies who receive all of their sales by mail or telephone. Customers are not seen in person and the risk involved is high. So the rates and surcharges are normally high.
* Internet Merchant Accounts- Internet Merchant accounts are similar to MOTO merchant accounts in cost and usage. Internet Merchant accounts address the unique needs associated with online business. The payments are made using a "virtual" terminal or by using a payment service gateway with custom-designed HTML forms or a shopping cart application.
A merchant account is an account with a bank or any other financial establishment that allows a business owner to accept credit cards or electronic checks through channels that include storefronts with credit card terminals, over the internet via online credit card processing, over the telephone, etc. Depending upon the different channels used, the types of Merchant accounts may be defined.
Broadly speaking, there are three types of merchant accounts- Retail, MOTO (mail order - telephone order), and Internet. A business may have more than one merchant account, and all accounts need not be of the same type. What differentiates the three types of Merchant accounts from one another is the transaction fees charged and the rules associated with the use of the account.
A Merchant account used to process transactions for a particular merchant will depend on the merchant’s business model. This is crucial because the rates and fees are determined on business model classification. Merchant accounts are assessed and evaluated for conformity by a processor’s risk department and credit card associations routinely.
The three types of Merchant accounts are: -
* Retail Merchant Accounts- With the least restrictive rules and minimum transaction fees, retail merchant accounts involve large transactions that are to be conducted physically. In this case the credit card has to be swiped by passing it through a physical credit card terminal. Retail accounts are mostly used by "brick-and-mortar" businesses such as restaurants, hotels, and grocery stores. Since the card is present during the transaction, the rates are lower and there is less risk.
* MOTO (mail order - telephone order) Merchant Accounts- Telephone order accounts are processed in the physical absence of a credit card. Thus, they have a higher transaction rate compared to retail accounts. They were originally created to address the credit card processing needs of mail order companies who receive all of their sales by mail or telephone. Customers are not seen in person and the risk involved is high. So the rates and surcharges are normally high.
* Internet Merchant Accounts- Internet Merchant accounts are similar to MOTO merchant accounts in cost and usage. Internet Merchant accounts address the unique needs associated with online business. The payments are made using a "virtual" terminal or by using a payment service gateway with custom-designed HTML forms or a shopping cart application.
Broadly speaking, there are three types of merchant accounts- Retail, MOTO (mail order - telephone order), and Internet. A business may have more than one merchant account, and all accounts need not be of the same type. What differentiates the three types of Merchant accounts from one another is the transaction fees charged and the rules associated with the use of the account.
A Merchant account used to process transactions for a particular merchant will depend on the merchant’s business model. This is crucial because the rates and fees are determined on business model classification. Merchant accounts are assessed and evaluated for conformity by a processor’s risk department and credit card associations routinely.
The three types of Merchant accounts are: -
* Retail Merchant Accounts- With the least restrictive rules and minimum transaction fees, retail merchant accounts involve large transactions that are to be conducted physically. In this case the credit card has to be swiped by passing it through a physical credit card terminal. Retail accounts are mostly used by "brick-and-mortar" businesses such as restaurants, hotels, and grocery stores. Since the card is present during the transaction, the rates are lower and there is less risk.
* MOTO (mail order - telephone order) Merchant Accounts- Telephone order accounts are processed in the physical absence of a credit card. Thus, they have a higher transaction rate compared to retail accounts. They were originally created to address the credit card processing needs of mail order companies who receive all of their sales by mail or telephone. Customers are not seen in person and the risk involved is high. So the rates and surcharges are normally high.
* Internet Merchant Accounts- Internet Merchant accounts are similar to MOTO merchant accounts in cost and usage. Internet Merchant accounts address the unique needs associated with online business. The payments are made using a "virtual" terminal or by using a payment service gateway with custom-designed HTML forms or a shopping cart application.
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