These days at least twenty percent of all purchases by consumers are made through credit cards. This percentage is growing steadily from year to year. Many people are finding it more convenient to carry their credit cards with them when they go out shopping than carrying a billfold full of dollars. Also credit cards are useful when people make impulsive purchases when they find a good deal while shopping. Thus it is important for merchants to be able to accept payments through credit cards or debit cards. Having a credit card merchant account enables a merchant to accept payment by credit or debit cards instead of cash.
The other non cash payment alternative of accepting payment by check is not preferred by most merchants as checks may bounce. Earlier many merchants were hesitant to accept credit cards because of the hassle of collecting the receipts and sending them to the credit card company like Visa or Mastercard. However with the rapid advancement of technology every thing is done instantaneously and the money is in the merchant’s bank account immediately. Technology has simplified the process to such an extent that many merchants find it more convenient than handling cash.
There are two types of credit card merchant accounts, card present and MOTO. In the card present system the card has to be presented for the payment to be made. The card is swiped through a credit card terminal or some such appliance that can ‘read’ the card. Once the terminal validates the card the customer simply has to sign the receipt for the sale to be completed. MOTO stands for ‘Mail Order Telephone Order’. This means that the card information is sent by telephone or mail and the card is not physically presented. This type of merchant account is less prevalent. It is preferred by mail order businesses.
Credit card merchant account providers have greatly simplified the process of setting up an account to start accepting credit card payments. Although the merchants have to bear the cost of hardware required like the Credit Card Terminal, virtual terminal, credit card imprint-terminal combination and imprint style, in most cases they provide free set up, free service and free software because they make a lot of money from the transactions. The credit card terminal or swipe system needs an internet or phone connection to be able to receive and send information to the provider about the transactions. The process is actually very simple to use. Every time a customer uses his or her credit card to pay for a purchase, once it is approved the amount is deposited in the merchants bank account after deduction of fees.
The fees charged varies from one merchant account provider to another. Thus merchants should do some comparison shopping before deciding on one. The things to consider for the purpose of deciding are fees, service and support and flexibility of payment options. The extra fees is offset by the increase in sales and profits because customers usually tend to spend more when they are using credit cards. The standard fees usually consist of swiped charges, mail, internet or phone charges, transaction fees on per transaction basis and monthly statement fees. 24 hour service support must be available as merchants would not like to lose any sales.
Every year Americans are spending billions of dollars (estimated to be more than $500 billion) every year in credit card purchases. This figure can only increase in the future. It is a well known fact that people tend to spend more when they use credit cards. Many merchants have found that their sales have gone up by as mush as 1000% after they started accepting credit cards. With so many advantages no merchant can avoid having a credit card merchant account. This system is convenient both for the customer and the merchant and that is why more and more merchants are preferring to have a credit card merchant account.