Archive for August, 2011

What is a merchant account?

If you are engage in any mercantile business and you want to accept payments through credit or debit cards, you need to set up a merchant account. You can acquire a merchant account from a bank, a credit card establishment or from other financial processing agencies. This kind of account will enable tradesmen to accept specific credit card payments.

There are a multitude of payment providers existing in the market today. Each provider has its own particular terms and conditions which might or might not be appropriate for the kind of business you operate. Furthermore, some providers charges you excessive fees and may have stern transaction policies which might be unacceptable to you. It is therefore exigent to study the terms and conditions of the providers you are planning to transact with, to enable you to make an informed judgment. Selecting the appropriate merchant account that will suit the particular needs of the type of business you are engaged in is very essential to maximize the full benefits of this payment mode.

Categories of a merchant account

A merchant account has three categories from which to choose from. These are the Retail merchant accounts, Internet accounts and MOTO merchant accounts.

A retail merchant account is the kind of account that has the most minimal transaction fees but has also limiting policies. This type of account is highly recommended for businesses like grocery stores, tiny hotels or pension houses and restaurants that do not plan on engaging in online or mail-system business transactions.  A retail merchant account necessitates for the actual presence of the credit card which should be swiped through a credit card terminal. A credit card terminal is a small machine that enables the device to read your credit card data as you pass your card through its reader-slot.

A MOTO merchant account on the other hand requires that you record the pertinent information on the credit card straight into a visual display unit set up or attached to a personal computer when processing credit card payments.  You can also opt to use the browser of the particular payment service provider’s website to enter the credit card information in processing a particular payment transaction. This type of merchant is highly recommended to use when it is not possible to have the physical presence of the credit card for swiping. This Mail Order-Telephone Order account however charges a much exorbitant rate for its transaction.

An Internet account on the other hand is a merchant account that works much the same with a MOTO account, except that they are only utilized for internet deals. Traders who own internet accounts utilize a virtual terminal to handle to handle credit card payments. Most packages for business web hosting already incorporates these service gateways or virtual terminals. They now even include HTML forms which can be customized to suit a business’ particular needs. These HTML forms are more or less similar to a virtual shopping cart.

A merchant account binds the trader to follow the policies and regulations set forth by the particular card they are accepting or transacting with. This is regardless whether the merchant has obtained the card directly from a bank or from other payment service providers.

Posted by admin on August 24, 2011 at 3:41 am under Uncategorized.
Comment on this post.

HIGH RISK MERCHANT ACCOUNT

While high risk merchant accounts generally refer to accounts sanctioned to merchants and business owners running ‘high risk’ companies, in the credit business, the term ‘high risk’ is defined more unconventionally. While this category includes companies or company owners with bad credit history, specific types of businesses are also listed as ‘high risk’ in a de facto way. These businesses generally include online casinos, bad debt services, online pharmacies and others. 

Following the common bank policy, if a company, or even a company owner is considered a ‘high risk’ business or merchant, it is almost impossible to get approval for a general merchant account. This is where high risk accounts come into play. Many credit companies, either international or offshore, avail customers with high risk accounts needed for business.

Although high risk merchant accounts are supposed to help a business grow, due to lack of care and consideration, a merchant often ends up with more loan and debt than anticipated. To avoid such dreadful results, consider the tips below while following common sense and good judgment.

First, always look for credit companies with good reputations and a satisfied customer base. Online reviews and word of mouth are good sources for this knowledge. Secondly, don’t trust your agent blindly. Read the agreements and terms of use provided by the company very carefully. Many of these companies contain hidden fees, such as per transaction fees and account cancellation fees. Compare two or more companies of your choice, and opt for the most suitable one for you. Thirdly, don’t fall for lucrative ads. Many of these are misleading, and will charge more than they state. Fourthly, pay careful attention to the details. For instance, some processors even charge for failed transactions. These points are deliberately written in fine print in the agreement letter, so make sure to read the papers thoroughly. And finally, don’t always go for companies providing the lowest discount rate. Try to be certain that along with transaction fees and other additional payments, the discount rate adds up to something affordable for you. 

Even though high risk merchant services may require additional attention and careful checking and planning, once you open the right one, your business should shift into high (and profitable) gear.

Posted by admin on August 4, 2011 at 11:49 pm under Uncategorized.
Comment on this post.