Before You Setup Credit Card Processing – 3 Types of Merchant Accounts … Which One is Right for Your Business
Making sure that you can accept credit cards is an important part of starting a small business. To facilitate credit card transactions your business will require a merchant account, which is basically a bank or payment processing company that specializes in such transactions.
Merchant account fees and charges depend on a number of factors; volume of transactions, the type of input device that is getting the credit card info (POS scanner in a grocery store versus someone typing in their credit card over the internet), the type of product or service you are providing, and the location of your business.
The more risk involved in the merchant account the more you should expect to pay for one. For example a merchant account for a brick and mortar POS (point of sale) swipe system in a grocery store will cost less than one for an off shore adult website. Here are the 3 major types of merchant accounts.
Merchant Account #1 Retail
Retail accounts are needed for companies which have a physical presence, like a grocery or supermarket. Such accounts require a physical device to collect and send the credit card information. These devices called POS (point of sales) systems are mandated for the majority of transactions by merchant account providers.
Merchant Account #2 MOTO (Mail Order Telephone Order)
MOTO accounts are tailored for merchants that take credit payments over the phone or by mail. As a result these types of accounts do not require you to have special point of sale equipment to swipe cards. Another characteristic of MOTO accounts are that they charge a higher discount rate, which is the charge that the purchaser’s card issuing company takes from a purchase transaction.
Merchant Account #3 Internet
Once people started to do business over the internet a third class of merchant account was developed. An internet merchant account is essential for anyone doing business online. They require a shopping cart application or payment service gateway in order to facilitate the transaction with the merchant account.
So there are the 3 main types of merchant accounts. You can decide which account is best suited to your business. You may find that it is more than one.
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