Do You Know Which Merchant Account Suits Your Business?
A merchant account is a platform that facilitates the processing of payments to business people via debit cards, credit cards, gift cards, and checks. It is a credit line that needs to be reconciled regularly alongside payment processors like VISA or MasterCard. The type of merchant account you need for your business depends on the type of industry and business model.
There are two basic types of merchant accounts; card present, and card not present. In the card present type of account, a credit card must be physically present during a transaction to be swiped. It is a low-risk type because the customer is always present during a transaction and signs to approve the transaction. These types of accounts are perfect for physical retail outlets and they attract low fees and rates.
Card present accounts have various subgroups. For instance, wireless merchant processing accounts which use portable credit card machines. It applies the same concept as the regular type and is perfect for businesses which require receiving money in the field, like home repairs.
A store and forward account is the type which allows credit card details to be stored, but not processed into a handheld machine. It is favorable for businesses on the go and do not need credit card acceptance, and experience reduced ticket value and credit card declines.
The other types of card present accounts include specialty businesses. For example, a grocery merchant service account for outlets that sell perishable goods, but no gasoline. A lodging account for businesses within units where customers sleep over. A restaurant merchant account that allows a business to authorize a customer’s card, and then go back to adjust for gratuity.
Card not present accounts facilitate transactions even when credit cards are not physically present. They favor enterprises that are internet based, telephone sales, and mail order businesses. It is very difficult to guarantee that a person was present during a transaction with these type of accounts making them very risky and highly charged. They are categorized differently as well.
Internet accounts are convenient for e-commerce websites to trade in real time over the Internet. The transaction is completed through an electronic gateway that either accepts or declines the card instantly.
Mail order accounts require customers to fill out their credit card information and their dispatch to merchants for a transaction. Merchants are responsible for keying in the credit card information and running them for approval, after which they deliver orders if the cards are okay.
A touch-tone telephone account usually prompts a customer or vendor to enter credit card information over a touch-tone phone. There is no need for credit card devices in this type of transaction. An authorization number is provided verbally and should be noted down on a receipt for the customer. The process is uncertain and charges high rates.