Merchant Account Types

Merchant Account Types


For businesses interested in accepting credit cards as a form of payment from customers, knowing the different types of merchant accounts available is important. Although the primary difference between the accounts is how you accept the credit card information, there are other aspects that are different as well. Below is a discussion of the three types of merchant accounts available.


This type of merchant account is most likely to be held by the owner of a brick and mortar operation, such as a restaurant or hotel. If you need to present your card so the cashier, waitress, or clerk can swipe it or if you can swipe it yourself, you are doing business with a company that has a retail merchant account. As part of that account, retailers must process at least 70% (although some companies set higher percentages) of their transactions via swiping. The reason for this rule is that merchant account holders generally receive the lowest transaction fee rates. Swiping is also the best way to minimize errors and errors can cost both the credit card processor and the retailer more money.

Most retail account holders must also purchase or lease the equipment for swiping and processing the credit card information.

Mail Order/Telephone Order

Known by the shortened acronym MOTO, these accounts are probably becoming one of the least commonly used today because fewer orders are being placed via phone or snail mail. However, these accounts can still be useful, especially for utility companies that accept credit card payments for bills.

Unfortunately for MOTO account holders, the transaction fees on these accounts are higher than with retail accounts. Processing these transactions can also be a bit more time consuming because the information has to be manually entered via a terminal installed on a personal computer or a virtual terminal that is operated through the Internet.


Until recently, most Internet business owners were had to choose the MOTO merchant accounts because these were the only other option available. Now many credit card processing companies are offering an Internet-specific merchant account. Unfortunately, these accounts also require the payment of higher transaction fees than retail accounts but their payment systems are more appropriate for the types of transactions online stores handle. For example, most transactions are either processed through a virtual terminal or through a shopping cart application. Most of these accounts are also going to come with more security features to protect the transfer of sensitive data.

The Bottom Line

Unless you do all of your business exclusively through the Internet, you may want to consider opening multiple merchant accounts so that you can provide more options to your customers. For example, if you sell a product via the Internet you might want both an Internet and a MOTO account so that you can work with customers who are nervous about transmitting their account information through the web site.

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