Deciphering the various types of merchant account services can be very confusing. Much of the sale and servicing of merchant accounts is unregulated, making confusion a valuable tool of an unscrupulous salesperson. Unless a merchant understands how banks classify merchant accounts, there can appear to be a confusing maze of merchant account types. Banks classify merchants and their accounts by the process used to harvest card data. The bank also considers the type of merchant and processes for transaction completion. This article serves to explain bank defined merchant account classifications.

Banks recognize two methods to harvest card data, Swiped and Keyed. These two methods are sub-classified by business type and transaction completion method.

Person-to-Person Transactions – Swiped Category

Merchants in this category have face-to-face interaction with customers who present their card at the time of transaction. A point of sale hardware terminal harvests the card data.

Merchant subcategories are as followed:

Retail Merchant – Brick and mortar stores or offices where the transaction takes place using the POS hardware. Restaurants or Catering Merchants – This is a special category allowing a customer to add tips after receiving the transaction slip that has be authorized for the restaurant bill. All restaurant businesses (more…)