What is a Credit Card Merchant?

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  • Written By: Jason C. Chavis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 August 2019
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A credit card merchant is a company that handles credit card processing between consumers and businesses. The credit card merchant services set up a type of bank account that is used by a bank, retailer and third-party processor of the actual credit or debit cards. This can be implemented by an actual storefront or through a system of ecommerce from an Internet merchant. The overall benefit of credit card processing through a credit card merchant is the fact that the purchases and payments are generally guaranteed by the bank so the retailer does not have to worry about receiving the necessary funds to cover the transaction.

Credit card merchants are required to work with a processing service in order to accept credit cards. Generally, the most common credit cards taken by retailers and online merchants are Visa® and MasterCard®. Other major credit card processing companies work with Discover®, American Express® and Diner's Club® cards. When a credit card merchant signs up for an account with each of these companies, they must adhere by a variety of rules in order to process the transactions. For example, a credit card merchant cannot require a minimum or enforce a maximum purchase amount, providing the card is accepted.


The third-party processor and merchant account bank enforce fees. These are administered to the business, which basically pays a per-transaction cost known as an interchange fee. Fees can vary significantly depending on the deal made between the business, the provider and the processor. Additionally, different types of processing transactions can result in different fees. For example, a transaction through an ecommerce site may be different than a card swiped at a retailer.

In order for a credit card merchant to use a card, he or she must utilize some form of processing. Older methods used by merchant accounts included making a carbon copy of the credit card itself. However, most cards are processed by electronic methods in the 21st century. Devices such as a credit card terminal are used to scan the magnetic strip located on cards, sending information via a modem to the third-party processor, which approves or declines the transaction. With advanced technology, this process can be nearly instantaneous for both the customer and credit card merchant.



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