Also see: Online Payments
Merchant Accounts
Merchant Account companies have partnered with the credit card companies to offer card processing equipment and services to businesses ("merchants"). These merchant account providers enable the business owner to process individual credit transactions by consumers throughout the world.
The "merchant" is the actual sole proprietor, store, business, or website providing the goods or services, and they pay the fees charged by the organization or credit card company offering the merchant account.
With a merchant account, you take credit card numbers and orders directly from your customer online, over the phone or in person. If you process credit card orders over the web, you should only store sensitive customer information on secure computers. While some people merely use a firewall, to prevent hacking, this information should ideally be stored on computers that are physically separated from the internet.
When applying for a merchant account, make sure and use an established and reputable firm, to protect yourself and your customers.
Merchant Accounts vs. Online Payment Sites
Both online payments and merchant accounts enable sellers to accept credit cards for auction purchases.
If a seller's business is limited to the internet, then they are probably fine with just an online payment service like Paypal or StormPay. But if a seller is doing a lot of business in the real world and needs card readers, mechanical card swipers and real-time credit card processing and authorization, then they probably need a merchant account.
Merchant account programs are often harder to be approved for, and sometimes have more fees. They are generally more expensive to operate than an account with a standard online payment site, but not always.
They also have a more lengthy application review process. After all, you are dealing directly with the big credit card companies, or a middle man representing them, and merchant acceptance standards are high. There is a detailed credit check, and your business might need to meet certain characteristics of sales volume, licensing, etc.
Why is the process to obtain a merchant account so involved? Remember how long it took to receive an answer the last time you applied for a personal credit card? Now imagine that you are going to be a business owner accepting those same types of cards from hundreds or thousands of people- the credit card issuers want to make sure that you know what you're doing and can be trusted.
With an online payment service, the difference is the website is technically the merchant, acting on your behalf. They process the card and accept payment, and then transfer the money for the sale to you less any fees. With an online payment sites, there's still an application, but due to the lower level of risk for them, it's a far less complicated process for you, and almost everyone who applies gets accepted.
Do you want the added features of a full service credit card acceptance program? This is called a merchant account, and is sponsored by Visa, MasterCard, Discover, American Express and other credit card companies.