I recently wrote about understanding payment gateways, so this week I’ll discuss a term that goes hand in hand – the merchant account. “What is a merchant account?” is one of the most common questions we get at Web Payment Software.
To define it simply, it’s the account you have with a bank that allows you (the business) to process credit cards as payment. The money you earn from your approved credit card transactions gets deposited to this merchant account. OK – easy enough. But you still might have a few questions. So let’s go a little more into detail.
Merchant accounts are great for accepting all major credit cards, monitoring transactions easily, and getting paid quickly,
The type of merchant account you have is defined under how your business accepts credit cards – “swiped” and/or “keyed.” “Swiped” transactions are the physical swiping of a credit card. This could be at a grocery store, hotel, etc. Then there are “keyed” transactions, which get used in the ecommerce world. Keyed transactions occur through a web site, virtual terminal, or something like the WPS Card Swiper app.
When a customer buys something through your online store, it goes to the payment gateway, and then the merchant account. The transaction is reviewed in the “merchant account stage.” This is where the credit card is checked for security. Then it gets flipped back around through the payment gateway, and if all the security tests passed, the money gets deposited into your merchant account within a few days.
Not too difficult, right? It’s just one of the many parts of having an e-commerce business.