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 A
Merchant Account is an account a merchant, like yourself,
has with a bank in order to accept credit card orders from
customers. Funds are collected by a bank from credit card
purchasers and disbursed to the merchant. Once the merchant
has a merchant account set up, the merchant can accept credit
card information from customers. A merchant account for online
use is typically referred to as a MOTO
Discount Rate (Mail Order / Telephone Order) account.
It is different in terms and regulations from a standard merchant
account due to the risk involved since the merchant is not
physically seeing either the customer or the credit card,
which increases the chances of fraud or charge backs.
Merchant account processing services are provided by a
bank or a third party processor (on behalf of the bank)
to the merchant. These services include authorization of
credit cards, settlement of funds through the bankcard associations
(MasterCard and Visa), depositing of funds to checking accounts,
merchant billing, and account activity reporting.
How to Qualify
The most important question that providers want to answer
is whether your business is likely to have a high incidence
of fraud or chargebacks. A chargeback
is a reversal against a sale that was credited to the merchant's
account. Chargebacks are usually the result of an error
made by the cardholder's bank, a misunderstanding by the
customer, or fraud. The merchant must provide proof that
the goods and services in question were provided to the
customer.
For the most part, tangible products are considered to be
much safer than services. Also, offerings that deliver purchased
goods immediately in exchange for payment are viewed as
being less risky.
Providers will also consider the type of credit card transactions
that your company performs. As a general rule,
"card present" transactions that allow you to swipe
the credit card and obtain a signature are considered to
be much safer than "card
absent transactions" that take place by phone, by mail
or over the Internet.
Basic background checks are also a must. They include a
thorough credit history
review of the owners or officers listed on the application,
in addition to credit references from two to three suppliers.
Finally, if you have accepted credit cards in the past,
providers will require previous merchant statements to better
gauge your charge and chargeback volume.
Merchant Account Providers:
Third Party Merchant Services:
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