When considering opening a merchant account it is important to understand that there are a few different merchant account types that your business can qualify for. The type of merchant account that is right for your business will depend on how you are accepting credit cards.
There are essentially two types of accounts that are offered, a swipe account or a keyed account. We will discuss both.
Swiped Account / Retail Account
This account type is set up for establishments that conduct business face to face and transact credit cards via swiping the credit card through a credit card terminal. The approval criteria for a swiped merchant account states that 80% or more of your credit card transactions must be swiped through a terminal. The transaction fees associated with a swiped account are the lowest available. The rates are lower for this account type due to the fact that occurrences of fraud are typically lower when the customer has to present the credit card in person. More information on protecting your business from fraud.
Keyed Account (Internet Accounts, Mail Orders, Telephone Orders, Fax Orders)
Keyed merchant accounts are set up for establishments that do not conduct business face to face. This account type is set up for situations where the credit card information is keyed or typed into a terminal, virtual terminal or website. This type of account represents a higher degree of risk for the processing bank. This is due to the fact that the identity of the customer completing the order cannot be guaranteed. The transactional rates for a keyed account will be slightly higher because of the increased risk of potential fraud. When accepting orders with keyed merchant account it is important to gather as much information as possible to verify the credit card information matches the information on file with the bank that issued the credit card. It is customary to gather the following at the very minimum:
- Credit Card Number
- Expiration Date
- Billing Zip Code
- CVV Code
If your business operates in an industry that has a greater degree of fraud attempts if might be advantageous to take advantage of additional fraud prevention tools.