MERCHANT
ACCOUNT : ECOMMERCE
A merchant
account is a specialized bank account issued by a merchant processing bank that
allows a business to accept credit cards such as Visa and Mastercard, debit
cards, gift cards and other forms of payment cards. This acceptance is also
known as payment processing, credit card processing or merchant card processing.In
the US, all merchant accounts are issued by an FDIC insured bank. To protect
the bank from liability, the bank requires merchants to agree to detailed terms
and conditions required by Visa, Mastercard, State and/or Federal regulators.
Most terms and conditions cannot be negotiated, though rates and fees can.To
protect the bank from fraud, financial liability usually falls on an individual
that signs the contract. This is considered standard and is only waived under
special circumstances, such as for non-profit organizations and publicly traded
companies.
Today a majority of credit card transactions are sent electronically to merchant
processing bank for authorization, capture and deposit. The method of processing
credit cards will vary by industry. In all circumstances either the entire magnetic
strip is read by a swipe through a credit card terminal/reader or the credit
card information is manually keyed in to a credit card terminal, a computer
or website. Whenever practical it is best to swipe a credit card because the
rates will be much lower and the incidence of stolen credit card number fraud
is greatly reduced. A payment gateway is an e-commerce service that authorizes
payments for e-businesses and online retailers. It is the equivalent of a physical
POS (point-of-sale) terminal located in most retail outlets. A merchant account
provider is typically a separate company from the payment gateway. Some merchant
account providers have their own payment gateways but the majority of companies
use 3rd party payment gateways. The gateway usually has 2 components: a) the
virtual terminal that can allow for a merchant to securely login and key in
credit card numbers or b) have the websites shopping-cart connect to the gateway
via an API to allow for real time processing from the merchant's website.(1)
Source (1) Wkipedia