E-Commerce Exchange on How Merchant Accounts Work

A business owner who needs a merchant account will be able to obtain one from a company that represents the credit card issuers. In order to set up these business accounts, both the merchant and the credit card payment processor will need to draw up a contract detailing the services that the processor will provide and for what price. Then, the merchants will be able to accept credit cards as payment in their businesses.

Business owners can only accept Visa, MasterCard, Discover or American Express if they have a merchant account. Only banks that have a relationship with Visa and MasterCard can set up these accounts because these banks have obtained the certification necessary in order to offer the services that business owners need to accept credit cards as payment. After business owners have purchased their merchant accounts and they are authorized to begin accepting credit cards, they will be able to begin allowing their customers to pay by credit card as described below.

An Example

1) As customers begin to pay for their merchandise, they swipe their cards on the store’s terminal or they enter their card’s information where it is stored in the software.

2) The sales associate electronically asks for permission to accept the card for payment.
If the card is acceptable, the processing network will send the authorization code back to the sales associate letting her know that the card is legitimate and there is enough credit to cover the purchase.

3) When customers are using the card in the store, they will be presented with a receipt to sign or they will be able to sign the store’s terminal directly. At this point, the customer is finished with this transaction but the sales associate will have one other thing to do.

4) The sales associate will complete every credit card transaction done during the day by asking the processing network to gather the money that it authorized previously. This action is ordinarily done at the end of the business day and it is called “settlement.” It can also go by the name of “settling the batch.”

5) After settlement, the processing network will be able to make an electronic deposit into the business’s bank account in one day. Sometimes, it takes a little longer but should not be any more than three days.

6) The business owner receives a statement in the mail or online from the credit card payment processor with each credit card transaction listed and the fees the business owner owes.

How to Process a Credit Card

Payment gateways are what processors use to perform the actions described above. They are a completely secure way of instigating this action without the need for a point-of-sale (POS) terminal or payment processing software. Business owners have the choice of one of two types of gateways.

The Virtual Terminal

The virtual terminal will allow a salesperson to accept credit cards by entering their own websites and entering the credit card’s information.

The Shopping Cart

The shopping cart makes it possible for the customers to place their items into a shopping cart and purchase them with credit card right on the merchant’s website.

The Card Reader

Card readers enable traveling salespeople and those who perform their services in the field to accept credit cards as payment. Visit https://firstaffiliates.com/Affiliatewiz/MobilePayments.aspx for more information on the mobile payment system. People can also accept checks or implement a gift loyalty program.

This article was written by E-Commerce Exchange, a payment service provider that offers all kinds of payment solutions and is recognized as an Intuit Premium Reseller.