Merchant Accounts: An Option for Every Type of Business


Each business has its own set of unique needs. Whether your business is a chain of grocery stores or a Mom-and-Pop gas station, an online financial services corporation or a local plumbing service, you can find a suitable merchant account for your needs.

Setting up a merchant account has many benefits for today’s business owner. It allows a business to offer more payment options to its customers, thereby encouraging those customers to shop more freely. It helps a business receive its funds more easily than it might if that business has to deal with each credit card company on an individual basis.

Another benefit is that a business can limit its susceptibility to financial loss by allowing it to offer its customers an alternative to paying with checks that might be returned weeks later for insufficient funds. Through a merchant account, the business can know immediately if the customer’s credit or debit card has a balance that can cover the purchase. That isn’t usually possible with check payments. Finally, customers may be more willing to make impulse purchases because they can pay for them with a credit card, whereas they may not have cash on hand or in the bank to purchase an item or services with a check.

Of course there are fees involved in using a merchant account. These can vary depending on what type of merchant account is used. They can depend, too, on how large the business is, how many transactions occur, and the size of those transactions. Like anything else in the business world, however, these fees are usually negotiable.

For those business owners who are interested in setting up a merchant account, there are several types available from which to choose. The type of business will generally determine the type of merchant account.

Retail Merchant Account
As the name indicates, the retail merchant account is used mainly by retail businesses: dress shops, hardware stores, and other businesses that sell to the public from physical addresses that their customers can visit. Fees for this type of merchant account are generally lower than for other types because they are more secure.  Credit or debit cards must usually be presented at the time of purchase and are swiped through a card reader, or the credit/debit card number is keyed into a cash terminal. The business owner or sales associate has the ability to request identification from the customer.

Mail or Telephone Order Account
This type of merchant account is often referred to as a MOTO account. The customer must provide his or her credit or debit card number via mail or telephone, and an associate at the business will enter that information into a computer that is connected to the merchant bank or payment processor. Fees charged for this type of account are usually higher than those charged for a retail merchant account, as the business does not have an opportunity to perform the transaction face-to-face with the customer. There is also no opportunity to request identification from the customer. On the other hand, the service or merchandise is not usually handed over to the customer right away in this type of business. Therefore, if the credit or debit card proves not to be valid or if it does not have a high enough limit for the purchase, the business will not usually lose anything.

Internet Merchant Account
This type of merchant account is used by online businesses to gather and process credit card information at the time that services or merchandise is ordered by the customer. Customers fill out their own orders online and provide their credit or debit card information in an online form. The information is transmitted directly to the merchant bank or payment processor and the card information is verified or rejected. Transaction fees for this type of merchant account are usually higher, too, for the same reasons that the MOTO fees are higher. But, also as with the MOTO account, the business is less open to losing anything in the event that the customer’s card is eventually declined.

Contacting a merchant account provider can get a business started in setting up a merchant account. Funds will flow faster and more efficiently to the business, and more customers will be able to take advantage of the business’s goods or services. With few drawbacks—if any—a business and its customers will quickly begin to enjoy a mutually beneficial relationship through the use of a merchant account.