Online Merchant Services
vs
Swiped Merchant Services
Different Types of Merchant Accounts:
- Swiped (or traditional face-to-face) Merchant Account
- Online Merchant Account
- Traditional Non-Swiped (or "MOTO" for mail-telephone order)
There are primarily three (3) basic types of merchant accounts:
- Swiped Merchant Account - also known as retail, card present, traditional, face-to face, etc.
- Online Merchant Account – using either a virtual terminal or software plus shopping cart.
- Traditional Non-Swiped; also called MOTO (which means mail order/telephone order). These type of merchant accounts traditional took orders by phone or mail and then the merchant would enter the cardholder information into a credit card machine (or credit card terminal), but nowadays these type merchant accounts mostly use a virtual terminal or software system and submit the transactions online.
The main differences between these types of accounts are the discount rates and transaction fees charged to the merchants, and the way that the actual transactions are performed. Swiped transactions present less risk to the credit card processor so the rates are lower than with non-swiped accounts.
Swiped Merchant Account
(or Card-Present merchant accounts)
This type of merchant account will offer the lowest discount rates and transaction fees because they represent the lowest risk to the credit card processors and banks. Traditional swiped merchant accounts are ones where the merchant is face-to-face with the customer or cardholder. These type accounts require that a very high percentage, usually 70% or more, of the credit card sales are done with the actual customer and "card present." They further require that the credit card be "swiped" by passing it through an actual credit card machine (or POS terminal). Swiped merchant accounts are associated with businesses that have a physical presence where the customer comes to in person in order to do the transaction – like in retail stores, restaurants, hotels, gas stations and grocery stores.
Online Merchant accounts
Online merchant accounts (for merchants with internet businesses) are very similar in cost and rules to that of the old mail/telephone order type of merchant accounts. Since the card is not present, the risk of fraud is higher. Since the risk of fraud and excessive charge-backs is higher, the credit card processing banks charge higher fees to compensate for this increased risk. The higher the volume on non-swiped merchant accounts, the higher the risk to the credit card processor.
Merchant accounts that are high risk and that have high monthly volume are harder to get approved that lower volume merchants. That's why it makes sense to use CreditCardEmerchant.com since we have extensive experience and success getting high risk-high volume accounts approved since 1991.
Online merchant accounts use either a virtual terminal or other software system that is integrated into the merchant's website and which allows transactions to be done automatically and in real-time over the internet. This type of account requires the use of an internet "gateway" which enables credit card transactions to be done on a "secured" basis.
Non-Swiped MOTO Merchant Accounts
These older style non-swiped MOTO or Mail Order/Telephone Order accounts are charged a higher discount rate and higher transaction fees compared to swiped merchant accounts. These type merchant services are also for when credit cards are not present and cannot be swiped through a credit card machine. This would be the case in such circumstances as when the order is taken over a telephone or through the mail. In the past, merchants that had a MOTO merchant account would process credit card payments by entering the credit cardholder information directly into an old style traditional credit card machine. Merchants would use the keypad on the terminal to enter the cardholder information. But these days most of these type credit card transactions are done on either "credit card processing software" or on a "virtual terminal" on a computer.
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