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Types of Merchant Accounts
Posted on 01 November 2003 02:15 AM

There are three separate types of merchant accounts: retail, MOTO (mail order - telephone order), and Internet. The major differences between these types of accounts are the transaction fees charged and the rules associated with the use of the account. It is not unusual for a business to have more than one merchant account, each of a different type.




    Retail merchant accounts. Retail accounts offer the lowest transaction fees and have the most restrictive rules associated with them. Retail merchant accounts require that a very high percentage (usually 70% or more) of credit card sales be conducted with the "card present" and that the card be "swiped" by passing it through a physical credit card terminal. Retail accounts are associated with "brick-and-mortar" businesses such as restaurants, hotels, and grocery stores.



    MOTO merchant accounts: MOTO or Mail Order - Telephone Order accounts are processed at a higher transaction rate 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 who receive all of 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 terminal that contains a keypad, by using terminal software installed on a personal computer, or by using a "virtual" terminal that allows the merchant to use a normal web browser to process transactions on a payment service provider's web site.



    Internet merchant accounts: Internet accounts are very similar to MOTO accounts with regard to cost and rules of usage. While many banks issue a MOTO merchant account to businesses conducting transactions over the Internet, some banks have started creating a separate Internet merchant account type to address the unique needs associated with this type of credit card transaction.



    Merchants that have an Internet merchant account process credit card payments using a "virtual" terminal or by using a payment service gateway with custom-designed web forms or shopping cart applications.