Merchant Account Types
The payment processing industry, classifies merchants into 2 specific categories, which characterize how they collect and process credit card information and conduct transactions.
Generally, there are two main merchant account types, which are called “Swiped” and “Keyed”.
Under each classification, there are numerous ways of processing that information.
“Swiped” or “Card Present” type merchants interact with their customers directly, face-to-face, usually in a ‘brick-and-mortar’ retail oriented environment and capture card information by physically swiping cards “over-the-counter” through a terminal or traditional point-of-sale system (PoS).
The customer’s signature is then captured on the terminal or simply on paper.
This group includes retail businesses, restaurants and bars, wireless and mobile merchants, lodging and hospitality merchants, etc.
These kind of accounts generally enjoy the lowest rates and transaction fees, since the customers’ credit cards are physically present at the point of transaction and the risk of having a transaction being returned or canceled is pretty minimal.
“Keyed or, “Card-Not-Present” merchants indirectly collect their customers’ card information, which means that neither the card nor the cardholder are present for the sale.
The group mainly includes mail order / telephone order merchants (commonly known as MOTO) as well as internet and ecommerce retailers, who take their orders online, through a website which utilizes a secure shopping cart and an internet payment gateway service.
Merchant accounts for businesses of this nature generally carry a higher cost due to the increased risk which is naturally associated with the lack of face to face interaction with the card holder.
Common Merchant Account Owners
- Traditional mainstream retailers, small businesses as well as medium sized and large merchants that operate on a local or nationwide basis.
- Mail or phone order based businesses, call centers, telemarketing companies and home based business owners.
- Online stores, ecommerce websites, eBay sellers, providers of digital goods and web hosting companies.
- Non-profits, donation and charity organizations and churches.
- New businesses and startups.
- Collection agencies.
- Credit repair companies.
- Travel agencies.
- Mobile phone based businesses (iPhone / Android).
- Law firms.
- High risk industries.
- Bad credit businesses.
Application Approval Time
Obtaining a merchant account may take some time, which varies from one broker to another.
However, with some providers the process can be quite easy, quick and hassle-free.
Some third-party, non-bank merchant service companies offer extremely fast approvals, meaning on the same day you submit your application.
After being approved, the setup process can also be quite quick and easy.
Many credit card processing companies offer quick deposits, usually within 48-72 hours. However, some processors have even faster turnaround time and can offer faster access to the money with next day funding.