subject: Understanding a Merchant's Account [print this page] Understanding a Merchant's Account Understanding a Merchant's Account
Every commercial establishment needs to accept credit cards. After all, a majority of shoppers use the plastic to pay for their purchases. Even online merchants accept credit cards, so a brick and mortar store has no reason not to honor these cards. First off, a store that wants to honor credit cards needs a merchant account.
The merchant account is a form of bank account designed to accept credit cards. The account acts as some sort of in-between for the seller or retailer and the payment processor or the credit card provider. In short, the companies that offer the account service to retailers are also the ones responsible for charging the credit card providers.
In concept, it might be possible to deal with the credit card transactions without a middleman if the retailer simply transacts directly with the credit card providers. Logistically, however, this isn't really possible. There's a matter of verifying the credit cards used for the purchases. After the purchase, one has to send the purchase information to the financial institutions. In short, it's a complex procedure. The merchant account allows the retailer to deal with their primary concern their business. The acquirer (the one that provides the account service) does all the work necessary.
A retailer can get a merchant account for his bank, although most banks have stringent requirements when it comes to account applications. For one, the store has to have good sales record. Stores with no sales history can get an account for middle layer providers. The service provider will serve as the middle man for you and the bank (which, in turn, provides the account). Of course, these companies have their own set of requirements as well, and they charge transaction fees per card usage (for every card swiped on your credit card terminal, a percentage of the total amount paid per transaction goes to them).
Needless to say, there is a merchant account that fits the needs of every merchant. Commercial establishments must look into these different types of account so they can enjoy the benefits of being able to accept credit cards in their establishment.
