Merchant services include getting a merchant account but go beyond just processing credit cards. This article helps define merchant accounts, merchant services, and how merchant services helps support payment gateways.

What Are Merchant Services?

Merchant services are the services that allow retailers and online merchants to accept credit card transactions. Merchant services can be accessed through a physical terminal through which cards are swiped or through a web browser with the ability to handle account information that is manually typed in, in which case, it may be referred to as a virtual terminal.

How to Acquire Merchant Services

Cashless commerce must be carefully set-up. There are legal requirements for handling customer’s credit card and other personal information, known as PCI DSS (Payment Card Industry Data Security Standards), that must be followed if that information is to be stored by the merchant. The merchant must either set up a merchant account and a payment gateway, or work with an online payment processing service, such as Google Checkout or PayPal, in which case, a merchant account is not needed because the online payment processing service takes care of all merchant services and transaction authorization itself, outside of the merchant’s domain.

What Is a Merchant Account?

A merchant account is a kind of bank account. It is designed for the express purpose of accepting credit cards (and debit cards and gift cards) and provides the connection between the merchant, the merchant bank, and the payment processor for the settlement of cashless transactions, both for expected payments, and in the cases of returns and chargebacks.

Some merchant accounts focus on only Visa and MasterCard, and charge extra for dealing with American Express and Discover Network cards, while others accept all of these and JCB as a matter of course, or require separate approval or charges for a different subset of cards.

Merchant service providers base their charges for their services based on the merchant’s application as well as their assessment of the risk involved in the particular industry the merchant is in. Certain products and services are, by their nature, more likely to have risk associated with them than others.

Merchant accounts make it possible for merchants to not only collect, but also to access the funds paid them via credit cards. Their PCI DSS experts help prevent fraud and reduce identity theft. They may have online reporting services, giving you easy access to your account information.

What Is a Payment Gateway?

The payment gateway is the transaction authorization system, doing the work of a physical Point of Sale (POS) terminal, but in the virtual world. Payment gateways are often provided by a separate company than the one that provides the merchant account, but they may be combined and offered as a package.

Other Merchant Card Services

Besides making cashless commerce possible for online merchants, merchant services may provide other benefits, for example:

• Accepting other types of transactions, including MOTO (Mail Order and Telephone Order) sales

• Accepting sale via fax

• Accepting electronic checks

• Developing a loyalty program

• Offering gift cards

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