What is a Merchant Account?

Nov 5th, 2011

A Merchant Account is a business bank account that allows you to accept payments from a credit card.

Credit Card ProcessingIt is an agreement between a merchant (you), an acquiring bank (the financial institution depositing funds from a transaction into your bank account) and credit card companies like Visa, MasterCard, American Express, Discover, Diners Club, JCB, etc.

If you intend to take credit card orders must establish a merchant account — a PayPal account is not a merchant account, and putting a PayPal button on your website does not constitute e-commerce.

Generally, there are 3 types of merchant accounts:

  • Retail merchant account
    Retail merchant accounts usually have the lowest transaction fees and typically the majority of their sales are card-present (swiped) transactions.
  • MOTO merchant account
    Mail Order or Telephone Order accounts are used when a card cannot be physically processed; the transaction fee usually is higher than for Retail merchant accounts.
  • Internet merchant account
    While similar to MOTO accounts, these accounts are limited to internet-based transactions. Transactions are typically processed through a virtual terminal or a payment gateway.

Fore more, read our post – “How to get a Merchant Account/Requirements“.

About the author:

Nina Khoury is a computer scientist, software engineer, data and information junkie and online marketer. She taught at various universities for more than six years and worked on projects for Fortune 500 companies including cisco, Intel and HP.