To be able to cater to millions of credit card users, you need to accept credit cards for your business transactions too. And the first step in this direction is setting up a merchant account.

What is a Merchant Account?

A merchant account is an account set up with a financial institution that allows you to accept credit card payments directly from your clients. The money charged from the customers is directly credited to your bank account. A merchant account is essential for processing and verifying credit card payments from customers and getting the money deposited directly in your account.

You can approach your bank or other independent financial institutions such as credit card processing companies to get a merchant account for your business.

Different Types of Merchants

• Swiped or Face-to Face merchants: These include retail businesses, restaurants, lodges etc. Retail merchants can physically swipe their customer’s credit card through a processing terminal at the point-of-sale.

• Wireless merchants: They need to accept credit cards wherever they are, and not necessarily within their offices or stores. Thus, the merchant account provider equips them with a wireless terminal that allows immediate authorization for their credit card sale.

• Keyed or Card-Not-Present Merchants: These are merchants who collect credit card information without swiping the card through a point-of-sale. In such cases, the credit card information must be typed or keyed-in for the transaction to take place.

• Keyed Face-to-Face merchants: These are merchants that meet their customers face-to-face, but not at a sales point where a processing terminal is present. Some examples of keyed face-to-face merchants are pizza delivery people, landscapers etc. who meet their customers either to deliver a product or provide a service. The credit card information for such accounts needs to be manually keyed in.

• Internet or Ecommerce: As the name suggests, these are the merchant accounts for websites and e-stores, where credit card transactions are processed through internet gateways. These are automatically processed in real-time as the customers purchase products online.

Based on your business, you can decide which merchant category you’d fall into, and your merchant account provider would set up an account with all the features that your business requires.

Merchant Account Costs

Before you select a merchant account provider, you also need to compare the charges and fees. Ensure that these are optimal and do not outweigh your profits. Some of the common provider charges and fees include:

• Transaction fees
• Sales transaction fee per item
• Batch fee/ACH fee
• Amex and Discover Transaction fees
• Authorization charges
• Statement fee
• Monthly Service fee
• Set up fee
• Annual Fee
• Chargeback Fee
• Early Termination Fee
• Retrieval Fee
• And many more

Setting up a merchant account is essential if you want to accept credit cards for your business. With little research and planning, you can acquire a merchant account that is feature-rich and inexpensive.