Your Guide To Merchant Accounts and Credit Card Processing Successful merchants know that they need to offer their customers every payment option available when they want customers to buy. This site gives you vital information for expanding your business by accepting credit cards with or without your own merchant account.

What is a Merchant Account?

A Merchant Account is an account a merchant has with a bank in order to accept 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.

• Online Merchants
  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.
  
  
• Retail Merchants
  Merchant swipes the card on the credit card processing terminal and the credit card machine dials the acquiring processor for credit card authentication. Acquiring processor sends credit card transaction to card association, which in turn sends the request for credit card authorization to the issuing bank.
  
  
• Mail Order merchants
  Accept credit cards using PC Software. There is no need to purchase an expensive stand alone terminal. Use your PC or Mac to accept credit cards and get better performance and record keeping.
  

What is merchant account processing?

Merchant account processing services are provided by a bank or a third party processor (on behalf of the bank) to the merchant. These services include authorization of credit cards, settlement of funds through the bankcard associations (MasterCard and Visa), depositing of funds to checking accounts, merchant billing, and account activity reporting.

How Credit Card Processing Works

There are five main components or players in the credit card processing system. They are

1. credit card issuing bank
2. consumer
3. merchant services account
4. acquiring processor/ acquiring bank, and
5. merchant bank.

The credit card processing system has been carefully set up to insure that all parties involved will be able to take advantage of this efficient way of doing business. The credit card authorization process is basically the same whether your business actually swipes the credit card through the credit card terminal, keys in the credit card on the pad of the credit card machine, or accepts the consumer¡¯s credit card over the Internet using online, real time credit card processing software. The main difference is the variable levels of security involved with the different ways to process credit cards. The following is a step by step explanation of how credit card processing works.