Merchant Account Services: The Different Types of Processing

Businesses only accepting cash can survive in this current cultural climate in e-commerce, but can those businesses thrive? Given that more businesses are incorporating online transactions, the most common and convenient way of doing business on the internet involves the use of a credit card. The ability to accept credit card payments has become very important, and using merchant account services have never been more needed.

Different types of merchant accounts exist, and it is the responsibility of the owner to fully understand each one as many problems arise from the improper classification of these types. Understanding how merchant accounts function keeps rates low and increases protection against fraud.

The first type of credit card processing involves the physical presence of a card. More commonly known as retail, these transactions include the physical presence of the customer and their ability to swipe their credit cards through a terminal.

The second type is Card Not Present (CNP) accounts. CNP accounts accept payment by using a phone, fax, e-mail or the traditional mail. As the name suggests, the merchant is not physically with the customer when the sale is made. Instead, transactions are made through a terminal or with Point of Sale (POS) software.

Business owners with recurring bills also fit in this category. Even if the first transaction involves the customer’s physical swiping of the card, the following transactions will not. Given that the majority of transactions will not require the physical presence of the customer, it is considered to be a CNP merchant.

The third type makes use of the internet. Much like CNP transactions, the internet account differs in the way bank information is acquired. An internet merchant gets a hold of a customer’s credit card information from their website. With the information physically captured from the customer, the next step involves the transmission through the business’ website.

The fourth type is called a mobile account. Like retail, this involves a face-to-face presence at the point of sale. The main difference lies in the lack of resources to process the transaction in real-time. A manual imprinter is used to capture an imprint of the buyer’s credit card. Affixed with a signature, this allows the business to manually process the sale later, assuring protection from chargebacks.selling merchant services

The last type is a seasonal business account. These only operate for a specific time each year. An example of seasonal businesses is a store that only sells Halloween costumes. These businesses will have their accounts closed for the off-season, and avoid paying a monthly service charge. This type of business must determine its operating months from the beginning of the application and cannot choose to open and close the account at random.

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