What is a merchant account?

A merchant account is a special account that allows your business to accept payments by debit or credit cards and electronic payments through a Web site. You must have a merchant account if you want to be able to accept credit cards from your customers. Setting up a merchant account usually involves the bank understanding your business and working with a third-party processor to arrange a mechanism for accepting payments.

A merchant account is not the same as a bank account. It acts between your payment gateway and your bank account, accepting funds from credit cards which are then deposited into your bank. When a customer makes an online credit card payment to you, the bank debits the amount from your customer’s credit card account and deposits it into your Merchants local business checking account, this process usually takes 48-72 hours.

Once a customer has made the payment, you are expected to fulfill your side of the deal by having the goods or services delivered in the shortest time possible to the customer.

There are various fees associated with having a merchant account. These could vary, depending on the type and company providing the service, but all merchant accounts have 2 main costs:

Discount Rates: With most merchant service providers, every processed sale is classified into 1 of 3 qualification levels (Qualified, Mid-Qualified, & Non-Qualified), and is charged a discounted percentage rate associated with that qualification. Each sales level and rate is determined by the type of card used, and/or how it is accepted and processed.
Transaction or Authorization Fee: This fee is charged for each electronic authorization request and transaction made, including all approved and declined sales, returns, voids, and batch settlements.

Some merchant account providers are:

PayPal
Authorize.net
Electronic Transfer, Inc.
EVO Platinum Services Group
MS Gateway LLC
Total Merchant Services

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What is a charge back?

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Why do I need a merchant account?

A merchant account allows businessmen to accept credit card payments. These days most consumers prefer to shop using their credit/debit cards, if a merchant accepts credit cards payment, the sales could increase from 15% to 100% depending on the types of business.

How much do merchants pay to accept credit cards?

The discount rate is one of the processing fees charged to your merchant account. There are various fees associated with having a merchant account.

How do I apply for a merchant account?

Using a merchant account, a business owner has the ability to accept credit cards in virtually any retail environment, including the Internet.

To apply for a Merchant Account, all you have to do is first submit your info to the Merchant Account Provider you want to work with.

What is a payment gateway?

A payment gateway is the link between your business merchant account and the customer's credit card. A payment gateway is an e-commerce application service provider, it is the equivalent of a physical point of sale terminal.