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Contributed by Bizfab R&D
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What is a Merchant Account?
A merchant account is the service provided by processing banks
in junction with Visa, Mastercard, American Express, Discover
and other credit card companies, which allows a business to
accept credit cards and debit cards as a form of payment.
Services may also include Gift Cards, Check Guarantee and other
related financial services. In general, most business experience
an increase of business between 20%-50%, just by accepting
credit cards.
Types of Merchant Accounts
There are 2 primary categories.
"Swiped" and "Non Swiped".
A "swipe" merchant will conduct
business face-to-face and swipe the
customers credit card through a credit card machine.
The second category is called "Non Swiped."
This includes all other business types such as mail order,
phone order and ecommerce.
How they operate?
When applying for a merchant account, you are technically
applying for a non secure loan against your promise to fulfill
said goods and services. Since it is a loan, the banks will
verify the legitimacy and credit worthiness of the business
and if there is an issue of a refund or a charge back,
it will be deducted from the consumer.
The bank you are applying to will also run a credit check to
determine your overall credit score,what
level of processing they will grant you and at what rate.
Difference between an Internet Merchant Account and a Payment Gateway Account
Internet Merchant Accounts are separate bank accounts for the merchant
that are approved and capable of receiving credit card payments from
credit card providers.
Internet merchant accounts typically do not hold funds for
an extended period of time such as your typical bank account but
usually transfer payments to another bank account designated by the
internet merchant on a daily basis.
The Payment Gateway Account is the online credit card processor or
transaction handler which is capable of hooking into credit card accounts
belonging to the online shopper and the merchant's internet merchant
account.
The payment gateway handles the verification and transfer requests.
The term account when used with "payment gateway" is not a funds
holding account but rather a "service account" that typically
has a log in where you can configure your payment gateway settings.
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