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TYPES OF CREDIT CARD
MERCHANT ACCOUNTS
To give your business the
competitive edge you need to provide a
way for your customers to pay by credit
cards. In order to do that, you have to
have a “Credit Card Merchant Account”
provider to process your transactions.
The provider has to give you a solution
with incentives, service, terms, rates
and features suitable for your business.
Prior to choosing the best solution for
your business, it will help to known the
various types of Credit Card Merchant
Accounts that are available in the
market. Having a good understanding of
the various types of merchant accounts
and its features, services and rates
will take you one step closer in
choosing the best credit card processing
soln. needed for your business.
Credit Card Merchant
Accounts can be broken down into 2 main
categories:
-
Card – Present
Merchant Accounts
-
Card – Not – Present
Merchant Accounts
The fees and rates on
these accounts are based on the outcome
of a simple rule:
Higher fees and rates are
applicable to businesses with higher
risk. Therefore, one immediate
conclusion can be that, card not present
merchant accounts will attract much
higher rates than card present merchant
accounts.
Let’s look into each type
in more detail:
The “Card – Present
Merchant Account” requires that both the
customer and the credit card are
physically present at the POS. The
administrator takes the customers credit
card and swipes it in machine, which
captures the details from the magnetic
stripe of the credit card. For that
reason, the holder of the card – present
merchant account should have some kind
of hardware installed at his business
location.
The Card – Present
Merchant Account is further sub –
categorized in to 2 categories:
-
Portable processing
solution and
-
Non – Portable
processing solution
Non – Portable solutions,
as the name suggests, will be installed
at a place and then cannot be moved.
This solution is preferable at retail
locations. The processing hardware is
linked to the modems or phones. When the
card is swiped, the date is captured
which goes through a real – time
authorization procedure. The costs are
lesser than portable processing
solution.
The Portable Processing
solution cannot guarantee a real – time
authorization. An example of portable
processing solution is the wireless
merchant account, which needs a wireless
card reader, attracting higher monthly
rates and hardware costs.
Another form of a
portable solution is “Store – and –
Forward” merchant account. This has a
similar hardware as the previous one but
also has a memory which will store the
details of credit card at the POS and
later forward it for processing. The
rates applicable here are lesser when
compared to the wireless merchant
account. This type is also more
affordable.
The cheapest is the “Card
– Not – Present” merchant account which
is a “Mail Order Merchant Account”
abbreviated as “MOTO”. All that is
required is the hardware which is used
to key information in about the credit
card of the customer. The best example
of such an account is the “Internet
Merchant Account”. |
