Different Types of Merchant Accounts


There are primarily three (3) separate types of merchant accounts:

  1. Swiped retail,
  2. Non-Swiped; also called MOTO (which means mail order/telephone order),
  3. Internet.

The primary difference between these types of accounts are the discount rates and transaction fees that are charged to the merchants and the way that the actual transactions are done.

Retail merchant accounts

Retail accounts offer the lowest discount rates and transaction fees because they represent the lowest risk to the credit card processors and banks. Retail merchant accounts require that a very high percentage, usually 70% or more, of the credit card sales that take place be done with the actual "card present" and that the credit card be "swiped" by passing it through an actual credit card terminal (or POS terminal). Retail accounts are associated with businesses that have a physical presence where the customer comes to in order to make the transaction such as retail stores, restaurants, hotels, and grocery stores.


MOTO merchant accounts

MOTO or Mail Order/Telephone Order accounts are processed at a higher discount rate and with higher transaction fees compared to retail accounts and are used when credit cards cannot be physically swiped. MOTO accounts were originally created to address the credit card processing needs of mail order companies which receive their sales by mail or telephone. Merchants that have a MOTO merchant account usually process credit card payments by entering the credit card information directly into a credit card terminal or a keypad by using "processing software" or a "virtual terminal" on a computer.


Internet merchant accounts

Internet accounts are very similar in cost and rules to that of the MOTO account. However an internet merchant account will generally involve a credit card procesing system that is integrated with the merchant's website and which allows transactions to be done automatically and in real-time over the internet and which often will include an internet "gateway" which enables credit card transactions to be done on a "secured" basis.


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