Cheap Merchant Accounts

What is a Merchant Account?

A Merchant Account is an account a merchant, like yourself, has with a bank in order to accept Visa, MasterCard, American Express, and Discover credit card orders from customers. Funds are collected by a bank from credit card purchasers and disbursed to the merchant. Once the merchant has a merchant account set up, the merchant can accept credit card information from customers.

A merchant account for online use is typically referred to as a MOTO Discount Rate (Mail Order / Telephone Order) account. It is different in terms and regulations from a standard merchant account due to the risk involved since the merchant is not physically seeing either the customer or the credit card, which increases the chances of fraud or charge backs.

How to Qualify

The most important question that providers want to answer is whether your business is likely to have a high incidence of fraud or chargebacks. A chargeback is a reversal against a sale that was credited to the merchant's account. Charebacks are usually the result of an error made by the cardholder's bank, a misunderstanding by the customer, or fraud. The merchant must provide proof that the goods and services in question were provided to the customer.

For the most part, tangible products are considered to be much safer than services. Also, offerings that deliver purchased goods immediately in exchange for payment are viewed as being less risky.

Credit card merchant account providers will also consider the type of transactions that your company performs. As a general rule, "card present" transactions that allow you to swipe the credit card and obtain a signature are considered to be much safer than "card absent transactions" that take place by phone, by mail or over the Internet.

Basic background checks are also a must. They include a thorough credit history review of the owners or officers listed on the application, in addition to credit references from two to three suppliers.

Finally, if you have accepted credit cards in the past, providers will require previous merchant statements to better gauge your charge and chargeback volume.

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