What is a Merchant Account?

To stay ahead in the competitive business world, you need to leverage the benefits of latest technologies. The success of an e-commerce business relies on the ability to accept credit cards. Today, merchant accounts have become widely popular among all types of businesses through out the world.

Merchant account is a bank account which provides an opportunity for businesses to accept credit cards and debit cards as a form of payment. Though a merchant account is offered through ordinary banks, it does not work like your savings bank account. It is a contract between the merchant and the bank providing the account, including set of rules about selling and payment details of products or services.

There are two types of Merchant Accounts:

Over the Counter (OTC) Merchant Account

This is the same what a typical retail merchant has. In this account, the fees for transactions are less. To make a transaction here, the credit cards and debit cards are swiped through the machine and a transaction slip is produced..

Money-Order/Telephone-Order (MOTO) Merchant Account

This account is used by business owners who work in a non face to face business environment. This type of merchant accounts charge higher fees as the card processing involves two steps rather than just one.

Money Order/Telephone Order merchant account is mainly used in an internet based business. The customer enters all his credit card information into a form on a website. Then, the data is then sent out for verification and finally the money gets subtracted out of the cardholder's limit. Sometimes, the card will not be charged at this stage. The amount is just placed in a holding account, and as soon as the product ships out the card is charged for the purchase amount.

It is always noticed that a consumer will spend more when they are able to shop using their credit cards instead of cash payment. Customers can really benefit from merchant account as it gives them the opportunity to use their credit cards and debit cards to shop online or in any retail store and deduct the money from their checking accounts without having to pay interest or any other fees.

Setting up a merchant account is very simple and affordable too. With the emerging new technologies, online payments through merchant accounts have evolved as the most convenient payment mode for customers.

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