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What is a Merchant Account? A retail establishment is able to accept credit cards, debit cards, electronic gift and loyalty cards through the medium of a merchant account established with a credit card processing firm. Merchant accounts or credit card processing services are provided by merchant banks or Merchant Service Providers (MSP).

A merchant or retail establishment benefits from subscribing to credit card processing services by tapping into the huge potential held by sales generated through card transactions. Retail establishments with card processing services are a preferred choice among shoppers. Providing such payment options invite the shopper to spend a little extra than planned.

Credit Card Processing

The technology used to make acceptable credit card transactions involves a credit card terminal. This is a single piece of electronic equipment with a telephone like keypad connected to a power supply and a telephone connection. A credit card can either be swiped on this machine or details of the card can be manually keyed in. The telephone connection is required to verify the validity of the card and authorize the transaction. Advancement in technology allows the same verification process to be completed through the internet or cellular networks.

Credit Card Terminal

The credit card terminal assumes an important role in credit card processing. A credit card terminal can either be purchased independently from a credit card terminal supplier, can be rented, leased or offered at no cost by the service provider.

Charges Associated with a Merchant Account.

A Merchant Service Provider (MSP) provides credit card processing services to a retail establishment at a specific rate. This mutually decided rate could either be on a monthly basis, per item or as a percentage of total volume of business generated through card (credit, debit and gift, loyalty cards) transactions. The per-item or percentage basis transactions rely on a schedule of rates devised by Visa and MasterCard known as Interchange Fees.

The rates charged by the Merchant Service Provider vary with the type of card or technology used for the transaction. For egs: The rate for a specific card varies with the use of a swiping terminal and a manually keyed terminal. Merchant account services are also made available for different formats of business which includes online, mail-order and telephone businesses.

The merchant establishments are also liable to pay other fees that contribute to the authorization of credit card payments. Such fees include: authorization fees, statement fees, batch fee, chargeback fee and a monthly minimum fee.

Who needs a Merchant Account?

A merchant account is subscribed by different types of retailers and by different formats of business. Types of retailers include: restaurants, retail stores, petroleum junctions, lodging facilities, etc. Different formats of business imply physical stores, online businesses (e-commerce), mail-order and telephone order businesses.

Considerations in Subscribing to a Merchant Account

The financial gains and expenditures must be taken into account to devise a successful method to accept card transactions profitably or at a low cost. The key aspects that must be considered in deciding a favorable merchant account must include:

• The cost of the credit card terminal
• Charges or rates specified by the Merchant Service Provider
• Scope of Transactions
• Application and Setup costs
• Acceptability of major credit cards and
• Security of transactions

Scope of transactions implies the ability of the service and the terminal to accept transactions involving a wide variety of payment methods. Payment methods include: credit cards, debit cards, gift cards, loyalty cards, electronic cheques, private label cards or store cards and other smart card technologies.

Credit Card Transactions Inc. can help you set up a merchant account and you can then start accepting credit card payment online.