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Do You Know Which Merchant Account Suits Your Business?

A merchant account is a platform that facilitates the processing of payments to business people via debit cards, credit cards, gift cards, and checks. It requires routine settlement with an entrepreneur’s bank along with payment processors like VISA or MasterCard. The type of merchant account perfect for a business depends on its industry and model.

There are two main types of merchant accounts; card present, and card not present. Card present requires a customer to present a credit card to a vendor during a transaction. Its risks are minimal since customers approve transactions through signatures. These kinds of accounts are favorable for physical retail outlets and their transaction fees or rates are low.

Card present types have many other subgroups. E.g. a wireless merchant processing account which requires a portable credit card machine. It applies the same concept as the regular type and is perfect for businesses which require receiving money in the field, like home repairs.

A store and forward account type allows credit card information to be held in a handheld device, but does not process the information. It is ideal for businesses that are on the move and do not require credit card acceptance, but have low ticket value and few credit card declines.

The other types of card present accounts include specialty businesses. For example, a grocery merchant service account for outlets that sell perishable goods, but no gasoline. A lodging account for a business located on the premises of a unit where customers sleep over. A restaurant merchant account which allows a business to adjust transactions for tips after a customer has authorized their credit card.

A card not present account does not require a card for a transaction to happen. It is mostly used for internet-based businesses, telephone sales, and mail order businesses. They are high-risk types because you cannot prove that a cardholder was present during a transaction and therefore attract high fees. They also have subdivisions.

Internet accounts are utilized by e-commerce enterprises to make online transactions in real time. The transaction is completed through an electronic gateway that either accepts or declines the card instantly.

Mail order accounts require the customer to fill out all their credit card details on an order form that is then sent to the merchant for processing. The merchants enter the credit card details and when the credit card details are accepted, they dispatch an order.

A touch-tone telephone account usually prompts a customer or vendor to enter credit card information over a touch-tone phone. There is no need for credit card devices in this type of transaction. An authorization number is provided verbally and should be noted down on a receipt for the customer. It is considered risky and attracts high fees.

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