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Merchant Account Basics


A merchant account is simply a special kind of bank account which allows businesses to accept payments via credit and debit cards. There is normally (but not always) either a contract or an agreement of some type between the business and the acquiring bank. Beyond this, there is quite a lot of variety and differences amongst merchant accounts. These differences mostly relate to how your business wishes to accept credit cards. There are different types of merchants, fees and even equipment associated with different types of accounts.

Retail Merchant Accounts

This type of merchant account is geared towards a business with a specific, offline store front. In this case, you will need an actual credit card terminal machine. There are a number of these to choose from, each with different costs and expenses. Many times, the company providing these will only lease them to an individual business but there are also purchase and buy out options. You may also be able to add-on check processing services.  There are also systems that have been created that turn your computer or laptop into a credit card terminal.

Mobile Merchant Accounts

If your business is constantly on the move, than having a mobile merchant account may be your best option. In this scenario, maybe you do business from a kiosk or at trade shows, conventions or other meetings. Perhaps you have a number of outside sales people or service providers whom you would like to be able to have process credit card payments directly. If so, this is your option.

This account will give you the ability to link wireless credit card merchant account machines or computer terminals such as laptops to process virtually anywhere. In some cases, you may even be able to have an application added on to your mobile smart phone!

Internet Merchant Accounts

To process payments online, it is essential to have a reliable merchant account. However, in this case you will need some additional, simple software. The most important of these is to use an internet gateway service. This is simply software which allows the secure processing and data encryption (and transfer) of the online credit transactions. In plain language, the gateway is what connects everything together and allows the banks to talk with each other, and then upon approval of the transaction, transferring the funds from your customer’s credit card account to your account.

Sometimes, you may need to pay special attention to whether your merchant account will integrate well with your other software or website. A good example of this would be if you are running a Yahoo online store. In this case, not all merchant accounts will be able to work properly. It is important to understand exactly what your specific requirements are before choosing.

Bottom Line

Each type of merchant account will have specific rules and requirements. This also includes a different fee structure and even a different set of needed equipment or software. Before jumping on board, take your time to learn and research about which option may be best for your business.

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