All About Merchant Accounts and How to Get Your Own Merchant AccountA merchant account is an account with a merchant bank that makes it possible for businesses to accept credit card and debit card payments online. And although merchant accounts are offered through local banks, a merchant account is not the same as a checking or savings account.
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All About Merchant Accounts
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Instead, a merchant account is like an agreement and a contract between the merchant account bank and the business owner which allows you to accept credit card payments online for small transaction fee, along with rules and regulations as well.
Types of merchant accounts: There are basically two types of merchant accounts: The “over-the-counter” (OTC) merchant account and the “money-order / telephone-order" (MOTO) merchant account. |
The “over-the-counter” merchant account is used primarily for retail merchants with brick and mortar storefronts and typically has a lower discount rate and transaction fee since the customer and the credit card are physically present at the point of sale which reduces the risk of fraud.
The “money-order/telephone-order" or MOTO type merchant account is primarily used for Internet and home-based businesses where the customer and credit card are not physically present at the time of sale which increases the risk of fraud and as a result can also increase the discount rate and transaction fee as well.
The “money-order/telephone-order" or MOTO type merchant account is primarily used for Internet and home-based businesses where the customer and credit card are not physically present at the time of sale which increases the risk of fraud and as a result can also increase the discount rate and transaction fee as well.
How a merchant account works
After your customer enters in their credit card information on your shopping cart system, the credit card data is then sent through an authorization and verification process which then allows the total amount of the sale to be deducted from the customers’ credit card.
After the funds have been successfully deducted from the credit card, the merchant bank will then proceed to process those funds, deducting their transaction and processing fees and then depositing those funds directly into your business or personal bank account within 48 to 72 hours, and sometimes less.
After the funds have been successfully deducted from the credit card, the merchant bank will then proceed to process those funds, deducting their transaction and processing fees and then depositing those funds directly into your business or personal bank account within 48 to 72 hours, and sometimes less.
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Rate and fees
Many business owners believe that it’s too expensive to accept credit cards online. And this may be true with some banks who charge annual renewal fees in addition to transaction and processing fees.
However, there are numerous merchant account providers that charge a small percentage of the total sales amount when accepting credit cards online.
Those fees can range from 2.5% to 3% per transaction. And there may be other fees as well such as Internet transaction / batch fees, address verification fees, monthly service / support / statement fees, and chargeback fees.
NOTE: Rates and fees may vary with merchant account providers so be sure to shop and compare.
However, there are numerous merchant account providers that charge a small percentage of the total sales amount when accepting credit cards online.
Those fees can range from 2.5% to 3% per transaction. And there may be other fees as well such as Internet transaction / batch fees, address verification fees, monthly service / support / statement fees, and chargeback fees.
NOTE: Rates and fees may vary with merchant account providers so be sure to shop and compare.
Applying for a merchant account
Most people believe that it’s difficult to apply and get accepted for a merchant account, especially if you’re a new business just starting off. However, applying and getting approved for a merchant account is not that difficult at all.
Furthermore, many merchant account providers boast a 98% acceptance and approval rate for new applicants even if you’ve never accepted credit cards before.
When getting approved for a merchant account, there are two departments who will make the final decision on whether or not your application gets approved: An ISO (Independent Service Organization) and the underwriter. Any many times, the ISO serves as the underwriter as well.
The ISO carefully evaluates the future risk and success of the new business and approves or denies the applicant based upon these factors. And if the business owner violates the terms and conditions of the agreement of the merchant account then the ISO / underwriter will close down the merchant account as well.
However, most new applicants are able to get approved without any problems within 24 hours or less. And the success of your internet business relies greatly on the ability to accept credit cards online.
Consumers want to be able to shop online using their credit cards in a safe and secure manner without having to mail in a check or money order or wait for a payment to clear before their product can be shipped.
Furthermore, the average consumer will spend more on your online store when they’re able to shop using credit cards. And they can also use their debit cards to deduct the money from their checking account without having to pay interest rates or credit card fees.
Suffice it to say that just about all internet businesses now accept credit cards online. And if you want to compete with your competitors then your business will have to do the same.
Furthermore, many merchant account providers boast a 98% acceptance and approval rate for new applicants even if you’ve never accepted credit cards before.
When getting approved for a merchant account, there are two departments who will make the final decision on whether or not your application gets approved: An ISO (Independent Service Organization) and the underwriter. Any many times, the ISO serves as the underwriter as well.
The ISO carefully evaluates the future risk and success of the new business and approves or denies the applicant based upon these factors. And if the business owner violates the terms and conditions of the agreement of the merchant account then the ISO / underwriter will close down the merchant account as well.
However, most new applicants are able to get approved without any problems within 24 hours or less. And the success of your internet business relies greatly on the ability to accept credit cards online.
Consumers want to be able to shop online using their credit cards in a safe and secure manner without having to mail in a check or money order or wait for a payment to clear before their product can be shipped.
Furthermore, the average consumer will spend more on your online store when they’re able to shop using credit cards. And they can also use their debit cards to deduct the money from their checking account without having to pay interest rates or credit card fees.
Suffice it to say that just about all internet businesses now accept credit cards online. And if you want to compete with your competitors then your business will have to do the same.
How much does a Merchant Account cost?
With our partner merchant account provider Charge.com merchant services it’s free to get started.
Charge.com offers the easiest, most affordable way to accept credit cards for your business:
-Rated #1 Merchant Account Provider Six Years in a Row
-No Setup Fees, No Cancellation Fees, No Contract
-Low Cost Guarantee with Rates as Low as 0.25%
-Free Software & Free EMV Terminals / Card Readers
-Charge.com Has Been Online More than 20 Year
And getting set up to accept American Express and Discover Card is free with Charge.com as well.
-Rated #1 Merchant Account Provider Six Years in a Row
-No Setup Fees, No Cancellation Fees, No Contract
-Low Cost Guarantee with Rates as Low as 0.25%
-Free Software & Free EMV Terminals / Card Readers
-Charge.com Has Been Online More than 20 Year
And getting set up to accept American Express and Discover Card is free with Charge.com as well.
Charge.com merchant services has everything you need to start accepting payments today. Leverage their top of the line payment processing services and be able to access optional tools and improved ways for you to do business. Perfect for all businesses looking for standalone payment processing solutions.
No Setup Fees, No Annual Fees, Lowest overall payment processing cost. 'No Cancellation Fee' policy reflects commitment for best ongoing support.
Visit the Charge.com website today for a free quote!
Charge.com has everything you need to start accepting payments today. Leverage their top of the line payment processing services and be able to access optional tools and improved ways for you to do business. Perfect for all businesses looking for standalone payment processing solutions.