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merchant account is a type of bank account for businesses that allows accepting and processing credit and debiting card transactions. Merchant account is often required for various businesses, especially for online operations. This account is specifically used to identify the vendor as the owner of the purchase. Information about the owner and transactions is sent directly to the bank.
This bank account is issued by acquisition of a bank for a certain vendor under an agreement to settle payment card transactions. Sometimes, an independent sales organization, a member service provider or other payment processor takes place as the third party in the merchant agreement. After signing a merchant agreement, the vendor is contractually bound to obey the regulations of card associations, such as MasterCard or Visa.
Functions of merchant accounts
There are two main categories of merchant accounts that are usually chosen by different businesses depending on their type of operations. 'Swiped' is referred to transactions when a customer pays for his/her purchases in person and is required to swipe or insert credit or debit card. This kind of merchant account is mostly used in retail. 'Keyed' is referred to transactions when the credit or debit card information is entered through a virtual terminal, typically using internet. This kind of merchant account is mostly used by e-commerce merchants, but some merchants decide to use this method also during face to face transactions as it is less expensive.
Locked
