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Merchant Account
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A Merchant Account comprises of a bank account with an Acquiring Bank. This account differs from a regular bank account in that it allows you to capture the funds received from credit card purchases.
- Acquiring Bank
The Merchant Account provider is referred to as an "Acquiring Bank". The acquirer pays you, the Merchant, before collecting the funds from the Bank that issued the Credit Card to the Consumer. Once the funds have been secured from the Issuing Bank, the Acquirer charges you for the total Discount Fees on your Credit Card Sales as well as a small fee for each transaction processed.
- Chargebacks
If a Merchant accepts a Credit Card in payment for goods not delivered, the Card Holder has the right to request a refund from his Issuing Bank. This is known as a chargeback. If the Merchant cannot honor their obligation to support the Credit or Refund to the Card Holder, the Acquirer is liable for the funds.
- Merchant Discount Rate
On each transaction processed using your merchant account, a small percentage based fee known as the 'Merchant Discount Rate' is charged on all credit card funds deposited into that account. This fee is known as the Merchant Discount Rate.
- Merchant ID Number (MID)
When signing up for an account, each merchant is issued a unique Merchant Identification Number specific to that account. This identification number ensures that the funds obtained are deposited into the correct account and is used while setting up a merchants online credit card processing service.
The Visa and MasterCard systems are the largest, most efficient, payment systems in the World and operate under an extensive set up rules by which participating Merchants, Banks, Acquirers and others must comply in order to utilize the systems. Once you establish your Merchant Account read the Operating Procedures and Policies provided by the Acquirer as your compliance to these regulations is very important to the operation and future of your business.
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