Merchant Account Help
- What is a Merchant Account?
A Merchant account is an account that allows you to accept and hold credit card transaction
monies. If you are going to be operating an e-commerce business, you must have a merchant
account. Without a merchant account you cannot accept credit cards.
- How It Works
Once a relationship with a merchant account provider or acquiring financial institution is set
up, the institution then deposits daily credit card sales into the merchant's account after
deducting certain fees. Some financial institutions also conduct merchant services, either
in-house or out-sourced to third parties. Such services include customer service, billing,
authorization, reporting and settlement services. Third-party companies offering these merchants
services include First Data Corp., Global Payment Systems and Nova Information Systems.
- How to Obtain a Merchant Account?
These accounts can be established through merchant service providers (MSPs) such as banks or via
independent service organizations ISOs). Many people feel more comfortable dealing with their
business banker as banks are generally viewed as secure and reliable, but many banks can be
clue-impaired when it comes to merchant accounts. Many banks will have no idea what you are talking
about or will work from a very short list of credit card processing systems. Banks are also much
more selective when deciding for whom they will open a merchant account. And lastly, banks
generally take a long time to establish a new merchant account, often 2 to 3 weeks. ISOs on the
other hand are extremely knowledgeable about merchant accounts as that is their primary business.
ISOs tend to be more flexible and are willing to accept more risk, since they are neither monitored
nor regulated. They also are able to get new merchant accounts processed in less than half the time
a bank takes.
Click here for FAQ's on Merchant Accounts.
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