Merchant Account

Merchant account is not a business bank account, as many people assume. It is a line of credit provided by merchant banks (sometimes called acquirers) and is facilitated by the underwriting department of a bank. There are many merchant account providers in the industry and most simply represent the banks their acquire customers onbehalf of. Some merchant account providers actually buy part of the risk for the merchant account and receive a % of the revenue that the bank makes for shared risk on the merchant account. Either way, this business service has become far too complicated of a process without any merit whatsoever. If the competition was not so fearce between the banks, one would wonder if these sales agents (ISO as they are called) would create so many pointless terminology just to confuse businesses in order win their business by what we call, exhusting the customer. Here at SecureTrans we do things differently. We have a relationship with 11 banks and offer you their merchant accounts. We expect the best merchant account rates for the lowest price.

 

Merchant Account and Credit Card Processing

A merchant account is an account that allows a business or company (referred to as a merchant) to accept credit card payments from their customers. Without a merchant account a merchant cannot accept credit cards from customers. Simply because they don't have any means without it to process payment and collect funds for the goods and services they sold to the customer.

Can a business accept credit card payment from their customers without a merchant account?

Yes. You can accept credit card payments from your customers for goods and services if you use a third-party credit card processing service instead of getting a merchant account for your business. But, be warned before you decide to do so. Third-party processors have been known to be companies with little or no customer service and their usual customers are often gambling sites, adult sites, gaming, and generally businesses that cannot get a merchant account on their own. At least not so easily and not without having a reserve account whereby they keep 20% of their sales in that reserve account for 6-month as means of risk reduction. Most often the fees are substantially higher (rate can be 10 times the merchant fees that you would get directly for you business) and service is often very poor, for such high prices. But you are paying a premium for a service for using someone else's (hence referred to as third-party) merchant account because, in most cases, a merchant cannot get a merchant account on their own business merits.

However, despite all the reasons why one may not wish to use a third-party processor, the worse reason is that by using someone else's merchant account, your clients buying goods and services from you ARE actually not really counted as your customers since they are using an merchant account that does not belong to you.

For instance, using PayPal as a processor is not only lots of headaches (although convenient at first) your customers are not even your customers. Really. Add to the fact that third-party processors (PayPal being a perfect example) put unnecessary demands on your funds anytime they wish without you having much say about it. We have had clients that scream and shout and use profanity against PayPal because their account was put on freeze or they had to adhere to additional demands by PayPal when their sales increased above $500 per month or PayPal expected them to use their social security number for a business account. This one seems to be the most silly decision (and very intrusive into privacy) that even though you may have a business account with PayPal, you are expected to provide your social security number and PayPal does not even accept your Business Tax ID number. Generally, PayPal is not alone with their nonsense self-designated regulations. Almost all third-party processors want you to depend on them and give you lots of incentives to sign up with them. Once they have you and you have implented their solutions and getting comfortable, BANG, they come at you with their demands and hope that you are too busy with your work and adhere to all the nonsence demands, such as additional information about your business, social security number, and ... the list is too long to list here.

  • Merchant Account for Internet payment processingMerchant Account for Internet (Website Shopping Carts or Virtual Terminal on PC)
    If you have a Website selling goods and services and are using the Internet for sales and promotion then you need an Internet merchant account that is often referred to as MOTO (or mail-order-telephone-order). Traditionally MOTO merchant accounts for used by catalog companies and those that took payment from customers whereby the card was not present at the time of the order processing. For instance if you purchasing from a catalog, you are mailing the order in so therefore you are not presently there and hence the credit card is not present at the time of order placement with the merchant. When Internet started to grow and banks and merchant account providers started offering Internet based merchant accounts (for shopping carts processing orders online) the underwriting departments at banks that approve merchant accounts decided to treat the Internet order placement the same as MOTO since essentially in both cases the card is not present with the merchant at the time of order placement. These MOTO or now referred to as Internet merchant accounts have a higher discount rate (fee) since the risk associated to the transaction is higher compared to card present, like swiping a card when paying your bill at a restaurant.
  • Retail Merchant AccountsRetail Merchant Accounts
    These merchant accounts are often much lower rate than MOTO and Internet merchant accounts since the risk of a fradulent or stolen card being used is substantially lower. Retail merchant account are used by restaurants, shops, hotels, and generally any business whereby you can walk in and buy goods and services and pay using your credit cards. These types of merchant accounts have been around for a long time and they use the same technology (in most cases) as in the 1970s. Unfortunately, many merchant account providers who wish to make extra revenue for their existing customers tend to want to get merchants to upgrade to newer machines and charge a lot of money for these card swipe machines which are not any different than using simpler ones. Here at SecureTrans we refuse to get our customers to buy what they don't need and are always recommending not to spend too much money on fancy swipe cards since they are no different in speed than the cheapers ones.
  • Retail Merchant AccountsMobile Merchant Accounts
    The use of mobile merchat accounts are growing very rapidly indeed. Anyone, anywhere, with a Web phone (iPhone, Blackberry, Android, WebPhone, etc.) can access the Internet and make a payment and hence can also therefore be used by a merchant who has a Web phone to swipe a customer's card and charge them for goods and services. This is a very rapidly growing industry as mentioned before and sales from Web phone, in particular iPhone, is expected to grow dramatically during the next few years. By the turn of the century orders via Web based phones accounted for less than $400 million in US and, little more, for the rest of the world.
  • By 2011 sales from Web based phones reached $162 billion worldwide. By 2015 global payment processing using web-based phones and integrated phone technologies will reach $950 billion. This growth is quite rapid compared to even the growth of the Internet itself.

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