There are several different types of merchant accounts. As you might expect, not all of them are suitable for a web host or online business that will be conducting most of its transactions over the Internet. Not all providers of merchant accounts user the same terms, fees, and pricing structures. In general, however, credit card merchant accounts fall into one of the following three types:
- “Card swiped” retail accounts. You have probably done business with any number of brick-and-mortar merchants with this kind of account. They take your card and slide it through an electronic terminal reader. You probably didn’t think about it at the time, but by reading your card in that way, the merchant proved that your card was actually present, providing the credit card company with an added level of security to show that the transaction was legitimate.
- “Keyed entry” retail accounts. These are designed for situations where the card is present but the merchant can’t electronically swipe it. Often card numbers are keyed into a physical terminal. You have encountered a merchant with this kind of account if you have ever done business with someone who took a manual imprint of your card (and if you’re old enough, you might even remember when all credit card business was conducted this way). Fees charged for these kinds of accounts are generally higher, because the risk of a stolen card being used and getting past security measures is considered to be greater.
- Internet accounts. These are also sometimes referred to as mail order or telephone accounts. If you conduct business over the Internet, this is the kind of merchant account you want; it is designed for businesses that often don’t see their customers face to face. This means the physical card is not present to be swiped or imprinted. These accounts are a little more expensive than the other two, because of the security issue involved when the card itself is not there.
If you don’t know the differences between these accounts – particularly in what is required for each transaction – you could end up paying lots of extra fees. That great deal you thought you made will turn out to be not so great when you get your monthly bill!