Merchant Accounts – Now You Can Propel Your Business Forward

In today’s rocky economy, it can be tough to make a go of many small businesses. When consumer confidence is low, retail businesses are often the first to feel the effects and end up being among the hardest hit as well. However, if you still haven’t set up a account, the many versatile services they offer could help attract new customers while retaining current buyers.

A account is a specialized kind of bank account that allows businesses to process credit cards to complete transactions. Although credit cards are partially to blame for current economic troubles, they continue to rise in popularity. Today’s average consumer takes paying with plastic for granted and often considers cash only policies to be a major inconvenience.

Merchant Account Providers

Since they are a special type of account, accounts are only available from two specialized sources. Businesses that enjoy a solid reputation and excellent credit rating may opt to apply for their accounts directly with a merchant bank. Merchant banks deal only with established and certified businesses and provide a number of other banking services in addition to providing merchant accounts.

Most businesses, however, choose to set up their merchant accounts with independent service providers, or ISOs. Sometimes these providers are also described as member service providers, or MSPs. ISOs are certified third party brokers that are sponsored and certified by reputable banks to offer merchant accounts.

ISOs offer many advantages over banks alone, including equipment sales or leasing, customer service, settlement management and back office services. However, the drawbacks associated with ISOs can include lots of fine print and extra service charges included in contracts. Keep in mind that an ISO is a for-profit business as well when dealing with them.

Before signing any agreements with a given ISO, be sure that you’ve researched competing providers well so that you get the best deal available. Additionally, scrutinize your final choice’s credentials well. Your final choice should be backed by a reputable bank that enjoys FDIC protection.

Kinds of Merchant Accounts

There are three basic varieties of merchant accounts available to businesses today. Each kind caters to particular types of transactions and carries its own associated fees and special considerations.

Some businesses who offer a wide range of services may find it in their best interest to opt for a combination of two types, depending on their sales trends. This basic run down will fill you in on what each type of account has to offer.

Retail Merchant Accounts

Retail merchant accounts are the most familiar and oldest type of account available. If your business operates from a storefront or another physical point of sale, chances are a retail account would best suit your needs. This type of account requires the purchase or leasing of a credit card terminal, which allows your employees to swipe customers’ credit or debit cards, thereby accepting or declining the card and payment instantly.

Retail merchant accounts are considered to be the most secure type of account and are much less prone to fraud or error than other types. This also makes retails accounts the cheapest of all. Per-transaction fees for this type of account generally hover around 1.8%. When you have a retail merchant account, at least 80% of all credit card transactions must take place with the card holder present.

Mail Order – Telephone Order Accounts

Mail order – telephone order, or MOTO, accounts are great options for businesses who deal with customers remotely, gathering credit card information either by phone or mail order form. Though once an extremely popular type of merchant account, MOTO accounts are increasingly being replaced by Internet based payment accounts.

This type of account is more prone to fraud and mistakes than the others since it requires your employees to enter card information manually. They’re also risky because the physical card is never present for the transaction, making these fees some of the steepest.

Internet Merchant Accounts

Internet merchant accounts allow businesses to accept payments on the web, via their website. Although larger companies often foot the expenses of creating a personalized payment portal, most small businesses enjoy the convenience of having their customers automatically redirected to a secure third party payment gateway when they are ready to pay.

Because customers must verify their identities as the card holder in several ways, Internet-based transactions are among the safest methods of payment available.

Even though they provide such a basic service, merchant accounts can help businesses garner new customers and thrive, even in troubled economic times. If you’re ready to take your small business to the next level of customer service and satisfaction, it could be time to apply for a merchant account. After a bit of diligent research and careful planning, your first merchant account could offer the boom your company has been waiting for.

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How Merchant Accounts Help Online Merchants

If you are a merchant who conducts business online, you need to have a merchant account. Virtually all transactions conducted online involve a credit card. Without a merchant account to back you and support you, you could easily get burned in the credit card business.

Make no mistake. Credit cards are big business. In the United States in 2003, there were just 21 billion transactions, totaling $1.4 trillion. Five years later, that number was up to 26.5 billion credit card transactions, totaling $2.1 trillion in sales. By 2009, that number was up to $2.5 trillion in business at more than 24 million locations around the world.

If you are an online merchant, you need a merchant account so you can safely and securely get your piece of that trillion-dollar pie.

For a fee, or a percentage of the sale, a merchant account will process your customers’ online payments. You may think, “The lower the rate, the more money in my bank account,” but that is not the only way to judge a system. After all, a good merchant account will do more than process your transaction.

Yes, your merchant account will process your credit card orders, as well as purchases using a debit card. But to do that, you need the best credit card processing equipment for your business. It must also be compliant with payment card industry standards. You also need to worry about technical support. If your equipment goes down, your business could too. So, no matter what business you’re in, take the time to explore merchant accounts and find one that helps build your business.
Here are some questions to ask:

· What is the level of customer service? As an online merchant, you are open 24/7. Is your merchant account going to pick up the phone after 5 p.m.?

· Is the service up on the latest fraud detection tools needed to protect you?

· What is the level of customer service? If it’s not superior, why use that service?

· What major credit cards will you be able to accept? VISA and MasterCard? Sure. But American Express and Discover? And what about electronic checks and gift cards?

· Will the service validate your payments instantly? That is important, especially if rush shipping is requested.

· How long will it take for payments to clear and get deposited into your account? If you’re a small business, you need your money quickly.

· How will the merchant account store sensitive information? Are its data centers PCI compliant?

Although the majority of transactions will be conducted using major credit cards, there are other options that merchants ought to consider. Their clients might also be interested in using:

· PayPal. This popular service enables global commerce. It is a fast, safe way to pay and get paid online, allowing members to send money without sharing financial information.

· Gift cards. These prepaid cards are often a boon to retailers, especially the closer it gets to the end of the holiday season. Some online merchants reported 12-fold increases in the sale of gift cards between Black Friday and Christmas Eve.

· Store-branded cards. Not all online businesses are at the point they can offer store-branded cards, but it is something to consider.

By using a merchant account for your business, you are introducing advantages for your customers and for you. Consider:

· Merchant accounts offer your customers alternative payment options.

· With some options, your customers can delay payments.

· Each form of payment gives your customers different security features, such as safeguards to avoid the misuse of their payment information or keeping their identity concealed.

So how do you choose the right merchant account system? Here are some issues to consider:

· When you key in your customer’s credit card information, you will pay a higher processing rate. By using a wireless terminal to swipe the payment card, you will pay a significantly lower processing cost. If you are strictly an online merchant, this is not an option, but many merchants offer both.

· It is critical – and worth repeating – that you choose a wireless credit card processing system that is PCI compliant and offers sophisticated encryption technology. This means you will be able to accept payments with fewer worries. (PCI compliance regulates how the cardholder’s information is kept safe from theft. A credit card terminal that is PCI compliant does not retain the cardholder’s information after the merchant submits it for payment.)

Help Your Web-Based Business Thrive With an Internet Merchant Account

There are a great many advantages to owning a web-based business. Arguably the most attractive aspect of these enterprises is that they offer individuals or small groups of people an opportunity to have successful careers without having to be employed by a larger company. Many of these types of businesses can be started with a minimum of capital and operated without a great deal of inventory. And web businesses tend to be powerful enough to fill a marketplace need, yet nimble enough to react quickly to market changes.

In order for a web business to be successful, it must have a steady, reliable method of generating revenue. But if the business sells its goods or services online, it will likely receive orders from people whom they do not know. These customers may not be willing to write a check for their merchandise and mail it to an address – and the business may not appreciate the lag time between orders and payments. The solution to this problem is obvious: web-based businesses need to obtain an online merchant services account in order to be able to process credit card payments over the Internet.

Such an account will allow customers to select what they want to purchase and then type their credit card data into a specialized form. Many web-based businesses utilize a “shopping cart” system of e-commerce, which lets customers buy multiple items and even save their credit card information for faster transactions in the future. Either way, the merchant services provider authenticates the credit cards and completes the purchases, taking money from the customers’ accounts and transferring the funds to the account of the Web-based business.

That’s why every merchant account requires a business to open a checking or savings account at a local bank. These accounts act as the final destinations for the funds collected by the merchant services providers for the businesses. In addition, the Web-based business must establish a relationship with a processing bank (which may or may not be the same bank where the business keeps its accounts) that oversees the merchant account. Finally, the business must enter into an arrangement with a third party that performs the actual processing tasks when customers pay with credit cards.

The good news for Web-based businesses is that there is a wide variety of merchant services provider choices available today. But how does a business owner select the right merchant account for his or her needs? Here are a few ways to differentiate between merchant services providers.


As with most products and services, cost is a key determinant among merchant account options. The way that a business owner gauges bottom line costs is to examine certain factors. First, the periodic rate dictates what percentage of each transaction will go to the merchant services provider. This rate generally ranges anywhere from 1% to 5%. Next, the transaction fee is the amount of money that will be assessed each time a customer submits a credit card payment. This fee can run anywhere from a few pennies up to almost a dollar. Finally, the business owner must look into any additional fees which are levied by the merchant services provider. These may be monthly usage fees, minimum revenue fees or penalties for chargebacks (when a customer disputes a credit card transaction on his or her statement after the purchase has been made).


Because of the potential for fraud and identity theft, it is vital that business owners protect the sensitive data submitted by customers when purchases are made. If a customer believes that his or her credit card number or personal information will be compromised during a transaction, he or she will not patronize the Web-based business. So when searching for a merchant services provider, make sure that their security protocols meet current industry standards and that they clearly display all relevant security information on the screen so customers can see it when they pay for their purchases.

Service and Support

Though merchant accounts generally run smoothly, there are occasions when business owners will need to contact the merchant services provider for help. Whether it’s because the processing system goes down or the business owner has a question about the terms of the merchant account arrangement, the merchant services provider should be accessible 24 hours a day, 7 days a week to handle any type of issue which may arise. It may be a good idea for a business owner to seek out reviews or testimonials in an effort to collect more information about a given merchant services provider’s level of customer service.


Finally, the business owner should inspect the software that is offered by the merchant services provider to its clients. The basic software which performs the processing functions and connects the processors with the businesses should be easy to understand and operate and must be reliable and dependable. In addition, many merchant services providers offer bookkeeping and data analysis software that is designed to help business owners monitor, track and evaluate their sales. If these programs are relevant and useful, they can assist the business owner in identifying trends, balancing books and tweaking product offerings to maximize revenues.

It is important to remember that selecting a merchant account is one of the most important decisions that the owner of a web-based business will make. So business owners should shop around and examine several merchant services providers before selecting one for their business. A seamless, cost-effective merchant account can help Web-based business owners become successful – but a merchant services provider that is expensive or unreliable can have devastating consequences on the health of the business.