What is Merchant Account Processing?

Justin Riche

Merchant account processing is the system that allows business owners to accept credit and debit card payments from their customers. Merchant account processing is offered to all types of businesses, from e-commerce companies to more typical businesses such as restaurants, convenience stores and others. Retailers, for example, can get a merchant account processing service from a variety of banks that have different fee structures and that might offer additional services. Other services might include electronic check transactions, mail and phone order transactions and business loans. Moreover, this type of account processing allows the merchant to get the money deposited in his or her bank account within a specified time frame, usually one to two business days.

Credit card being swiped through a terminal.
Credit card being swiped through a terminal.

Having a merchant account processing tool is almost necessary for modern business owners who sell goods and services to a wide range of consumers. This is because a high percentage of transactions no longer involve physical cash changing hands — most people perceive electronic payments to be the most convenient. Internet transactions can be targeted for fraudulent acts, so most merchant card processing will be encrypted to ensure that nobody can steal sensitive information, such as credit card numbers and the other details about the cardholders. This is a feature offered by a high percentage of the companies that process merchant accounts, which is necessary for the peace of mind of all parties involved.

Different banks or other providers of merchant account processing services will structure their fees in different ways and might base them on a particular criteria. For example, if a bank considers the activities of a particular business owner to be of high risk, the bank might charge him or her a higher fee than one who has a low-risk business. Additionally, the bank might charge a setup fee, a fee per transaction, a periodic maintenance fee, and various other fees. Feels also might be incurred for things such as chargebacks, which happen when customers ask for a refund from the merchant, for example.

Moreover, one might find that not all merchant account processing services will accept all of the credit cards issued by different credit companies. They might be able to process transactions only from the most commonly used credit and debit cards from well known issuers. Sometimes, though, some providers might offer options to accept other lesser-known brands of credit cards at an extra cost. If this is the case, then typically the providers will charge a base fee for accepting one or two of the most popular types of credit cards, and for any additional kind of credit or debit cards, there will be extra charges.

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