BUSINESS MERCHANT ACCOUNT TYPES

2007-03-08 10:33:40

( Financial )



Business merchant account is a special type of account that allows a business to accept and process credit card payments. It varies in class according to the type of business each businessman operates as well as the subsequent needs in accepting credit card payments.

Common Types of Business Merchant Account

There are two common types of business merchant account namely Point of Sales and Mail Order or Telephone Order merchant accounts.

Point of Sales Transactions Merchant Account

Business that accepts point of sales transactions requires a merchant account where buyers can swipe their credit cards at swiping machines during purchase. In recent years, swiping credit card machines have been replaced by software which permits credit card processing through computer modems. Still there are establishments which use computer keyboard add-on card swiping devices to process credit card payments.

Point of sales merchant account is usually used by businesses with customers purchasing directly from their establishments. Groceries, hardware, boutiques and other on site establishments use such type of merchant account.

Mail Order-Telephone Order Merchant Account

Mail order or telephone order merchant account is commonly known as MOTO merchant account. It is used by businesses which accept credit card payments over the internet.

MOTO merchant account is considered a high risk merchant account. It charges higher rate due to the risk faced by businesses for transactions where credit card holder is not doing the transaction face to face since transactions are done over the internet. Merchants are not assured of payments since it is not guaranteed that the credit card holder is personally doing the purchase. Thus, the probability of fraud is high.

Applying for an Internet Merchant Account

Merchants can either apply for an internet merchant account through an independent sales organization or a bank. An independent sales organization is a third party which acts like a broker between a merchant and a bank. It is more flexible in providing services to riskier businesses which traditional banks are known to be more stable and reliable but are selective in issuing internet merchant account.

Merchants are advised to be cautious in accepting service of brokers promising easy entry into electronic commerce. They are advised to look for hidden fees charged by these brokers who can make your entry into electronic commerce more costly.


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