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Q.) What Defines A Merchant Account?

A.) Within the payment processing industry, merchant accounts are categorized according to how they collect their credit card information and how they process their transactions. There are two primary merchant account categories, "Swiped" and "Keyed" which reflects the two basic methods used to capture credit card information. Now within these two primary account categories are additional sub-categories, these are broken down according to the type of business and transactions techniques.

"Swiped" or "Card-Present" merchants directly interact with their customers face to face and physically swipe their customers credit card through a terminal or point-of-sale system. This is deemed the most secure manner to accepting credit cards by the card issuing companies.

Retail Merchants: normally conduct their business in an actual storefront or office space and interact with their customers face-to-face. They primarily use counter-top terminals or Point-of-Sale systems.

Restaurant Merchants: requires a special set-up that allows for tips to be added to the final sale amount by settling the transaction with an adjusted price that will include the tip amount.

Wireless / Mobile Merchants: needs to have the ability to accept credit cards transactions wherever they are located out on the road. They use wireless terminals or mobile phones to run these transactions in "Real-Time".

"Keyed" or "Card-Not-Present" merchants indirectly collect their customers credit card information in a non face-to-face environment. Depending on their type of business and technology, these transactions can processed in many different manners such over the internet or through a virtual terminal via a payment gateway

Keyed-In Face to Face Merchants: these type of merchants do not process a credit card transaction with the actual card or customer present. The generally take orders via over the phone, fax, email or internet and then manually key-enter the cardholders information through a terminal or payment gateway. They then deliver their product or service to the actual customer face-to-face.

Mail Order / Telephone Order (MOTO) Merchant: rarely if ever meet their actual customers. The customers card information is gathered via over the phone, fax, email or internet and then manually key-entered into a terminal or payment gateway software. Once the transaction is approved and completed, the product is then shipped to the customer for delivery.

eCommerce / Internet Merchants: conduct ALL of their business over the internet through a web site. So all credit card transactions are processed online via a payment gateway in "real-time". The payment gateway is integrated into the web site's shopping cart. The cardholders card is charged instantly.