Merchant accounts are a key aspect of business operations for most merchants. Merchants have a variety of options when choosing a merchant account service provider with transaction costs being a key component in the decision.
Merchant accounts are provided by merchant acquiring banks which partner with merchants to facilitate electronic payments. If a brick and mortar business chooses not to accept electronic payments and only allows for cash, then they would not necessarily need to establish a merchant account and could rely on just a basic deposit account at any bank. Online businesses, however, are required to establish merchant account partnerships as part of their business operations since electronic payments are the only option for customers in making purchases.
A merchant must establish a merchant account with a merchant acquiring bank if they plan to offer electronic payment options for their goods or services. Merchant acquiring banks play a key role in the electronic payment process and are essential for efficient processing and settlement of payment transactions.
Merchant acquiring banks and businesses establish merchant accounts through a detailed merchant account agreement that outlines all of the terms involved with the relationship. In an electronic payment transaction, a business sends card communications through an electronic terminal to the merchant acquiring bank. The merchant acquiring bank then contacts the branded card processor who contacts the card issuer.
The card issuer authenticates the transaction through various approvals that include fund availability checks and security checks. Once authenticated the approval is sent to the merchant acquiring bank through the network processor. All of the card communications occur within a matter of minutes and incur various fees for the merchant which are deducted from the merchant account.
The merchant acquiring bank charges the merchant a per-transaction fee. The network processor also charges the merchant a per-transaction fee. These fees can range from 0. Merchant acquiring banks also charge merchants monthly fees as well as any special situation fees.
The monthly fee on a merchant account is paid to the merchant acquiring bank for covering certain electronic payment card risks that might arise from a transaction as well as for the service of settling transaction funds. Credit Cards. Company Profiles. Your Privacy Rights. Back to Town Square. What are merchant services? Consider some of these merchant service tools Understanding the different types of merchant services can help you determine which solutions are right for your business.
Here are a few merchant services to consider: Credit card processing Debit and credit card processing products allow you to accept payments from customers. The card is swiped through or keyed in to a terminal. The terminal sends the card information to the credit card processing company. The card is authorized. The credit card processing company sends the payment to your bank. Your bank deposits the payment into your bank account.
Point-of-sale solution A point-of-sale system is the hardware and software that enables your business to make sales when customers check out online or walk up to your counter to make a purchase. Virtual terminal Virtual terminals are virtual representations of credit card terminals. Gift card and loyalty programs Gift cards and loyalty programs can grow customer retention and loyalty.
Back to top. Get Started. Save Word. Definition of merchant Entry 1 of 3. Definition of merchant Entry 2 of 3. Definition of merchant Entry 3 of 3. Synonyms for merchant Synonyms: Noun dealer , merchandiser , trader , tradesman , trafficker Visit the Thesaurus for More. Examples of merchant in a Sentence Noun Merchants traveled hundreds of miles to trade in the city. Prizes were given by local merchants.
Recent Examples on the Web: Noun The dispute began when a Chinese woman who had been arranged to be married to an older merchant ran off with a younger man, Huang said. First Known Use of merchant Noun 13th century, in the meaning defined at sense 1 Adjective 15th century, in the meaning defined at sense 1 Verb 14th century, in the meaning defined at intransitive sense. Learn More About merchant. Time Traveler for merchant The first known use of merchant was in the 13th century See more words from the same century.
Phrases Related to merchant doom merchant merchant seaman speed merchant. Style: MLA. English Language Learners Definition of merchant Entry 1 of 2.
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