3 Types of Merchant Accounts – Credit Card Processing Decisions for Small 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.

Costs associated with merchant accounts are related to numerous factors such as credit card processing volume, the type of service or product you are selling, the country you are doing business in, and the type of device that is taking the credit card info (i.e. a swipe machine in a grocery store).

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

A retail merchant account is used in a “brick and mortar” business such as a grocery store or a drug store. They require you to have POS (Point of Sale) equipment for the customer to be able to swipe their card. A merchant account requires that the majority of transactions are processed via a POS machine.

Merchant Account #2 MOTO (Mail Order Telephone Order)

When companies started to accept payments via mail order and over the phone, a second type of merchant account was developed. These accounts do not require special equipment to process the transaction since the credit card holder is not physically present. Since this type of transaction is more risky that the retail transaction it is typically a more expensive account.

Merchant Account #3 Internet

This is type of account has become a very popular option for merchants and essential for anyone doing business online. These types of accounts process the credit card payments using a payment service gateway or shopping cart application.

These are the main types of merchant accounts. You might find that your business requires more than one type.

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