Different Types Of Merchant Account Solutions

Merchant account solutions provide you with what you need to process payments. Now that cash is no longer the primary purchasing tool, there is a need to understand how credit/debit cards and online payments are processed.

According to one survey, 9 out of 10 respondents admitted that they paid for at least one online purchase during the last 12 months. The main purchasing tool used in online transactions is in the form of credit cards and e-wallets. You need to make sure that you understand how to process these payments because it is integral to the overall customer experience and the profitability of the company.

As the eCommerce industry continues to grow, you need to prepare your business for the opportunities that it can bring. To get you started, let us discuss what a merchant account solution is.

What is a merchant account?

To understand completely what merchant account solutions are, you need to know what a merchant account is.

This is basically a type of account that acts as an intermediary between your bank account and that of the business that you are transacting with. Every time a customer makes a payment, it is sent to your merchant account first before it is transmitted into your bank account. Given that role, it is safe to say that a merchant account acts as a payment processor too.

The merchant account is set up through a credit card processor that is also known as the acquiring bank. Once you have this merchant account, you are free to accept payments from credit and debit cards.

Industry reports reveal that the credit card segment is expected to grow as a payment mode. The driving force for this growth is the higher adoption of this purchasing tool. The more companies opt to open merchant accounts, the higher the growth will be.

Now, what are merchant account solutions? They are the ones providing the merchant account services that will help process credit/debit card and online payments, and the transfer to your bank account. If you want to get the best solution for your merchant account needs, you need to find the right partner that will provide this for you.

What are the different types of merchant account solutions

Merchant account solutions come in different types depending on who provides the service.

Traditional banks

There is a high chance that your own bank offers payment processing services. You have the option to use this service. However, what they provide may not be as extensive as what independent merchant account businesses will offer.


This stands for Independent Sales Organization/Member Service Providers. These companies are commonly known as merchant account providers. These are the companies that specialize in processing credit card payments. They offer a more comprehensive package that includes processing of credit card payments from online, mobile, and wireless transactions.

Payment Gateways

These are exclusive to online merchants. They allow simultaneous processing of credit card transactions – something that usually happens in an ecommerce website. This particular process will go through 2 authorization steps. The first is through the card issuer and the next will be with the payment gateway. This makes it more secure. While it may seem like a lengthy process, it actually takes just a few seconds to complete.

Apart from these three, merchant account solutions can also be differentiated based on the type of payment that they receive. Basically, there are two types of credit card transactions.

Retail accounts

This is the account that holds mostly payments from a credit card terminal. That means the customer paid in a brick and mortar store or establishment. An actual credit card was physically swiped to pay for the purchase. This usually has a lower transaction fee.

Internet accounts

This account processes credit/debit card payments without the physical card. That means the transaction happened over the phone, or on the Internet. Some retail accounts accept Internet or phone transactions. However, if it ends up being more than half of the transactions, a separate Internet account will have to be opened.

Wireless solutions

This allows credit/debit card processing even in remote locations. The merchant uses a wireless terminal that can send transactions. This is used for purchases done in temporary locations like trade shows, or outdoor markets/fairs. It is also ideal for mobile services, or sales happening in the field (e.g. towing services).

Choosing merchant account solutions

Now that you know the different types of merchant account solutions, you need to know how to choose between them.

First of all, you need to take into consideration your business. How can the merchant account support your business processes? Also, you have to consider your clients. What do your customers prefer to use? Are they more inclined to go to a store? Or are they more inclined to make purchases online? This will affect the type of merchant account that you will use.

Obviously, the fees will have to be taken into consideration as well. The merchant account will involve a couple of fees – some of them depend on the type of transaction done. The fees include Authorization fees, Transaction fees, Statement fees, Monthly minimum fees, Annual fees, etc. It will vary depending on the merchant account you will use. As mentioned, credit card transactions for retail accounts are cheaper than Internet accounts. You need to be prepared to absorb these fees and incorporate them into your pricing strategy. Some of the fees are also passed on to your clients. There is nothing wrong with this but you have to ensure that your customers will be informed of it.

As you can see, there is a lot involved in merchant account solutions. Make sure you take the time to understand your options so you can find the perfect solution for your business.


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By |2019-08-27T14:30:42+00:00August 27th, 2019|Industry News, Small Business|