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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“.

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