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credit card processing account types


what type of credit card acount is right for your business? Do you sell online, face to face or at the customers location? All these factors should be taken into consideration when setting up your merchant services account.

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									Merchant Services – Types of
Merchant Accounts
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. Within these two primary account categories are additional sub-categories,
these are broken down according to the type of business and the way in which the transactions are completed.

“Swiped” or “Card-Present” merchants directly interact with their customers face to face and physically swipe their
customer’s 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. The sub-categories within this group include:

* Retail Merchants: normally conduct their business in an actual storefront or office space and interact with their
customers face-to-face.

* 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. Using existing systems or by installing new
POS restaurant systems.

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

* Hotel / Lodging Merchants: will authorize a customer’s credit card for a certain sale amount and then depending
on length of stay or additional services rendered, will adjust and settle that transaction a day or more later.

“Keyed” or “Card-Not-Present” merchants indirectly collect their customer’s credit card information in a non face-
to-face environment. Depending on their type of business and technology, these transactions can process in many
different manners. The sub-categories within this group include:

* Keyed-In Face to Face Merchants: These types of merchants generally do not process a credit card transaction
with the actual card or customer present, although there may be some instances where this may occur. Generally
they take orders over the phone, or via 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) Merchants: rarely if ever meet their actual customers. The customers card
information is gathered over the phone, or via 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 and all credit
card transactions are processed online via a payment gateway in “real-time”. The payment gateway is integrated into
the web sites shopping cart. The cardholder’s card is charged instantly.

Rob Olson

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