Merchant Accounts

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About Merchant Accounts


Defining a Merchant Account:

A Merchant Account is not really an “account” but is rather a legal contract where an acquiring bank lends credit to a processing merchant that wishes to accept credit card payments. In essence, it is the ability for a business to accept credit cards with a form of credit protection from a bank as payments for services rendered by the business.

In the high tech information age we live in, consumers expect to pay for products and services with their credit cards.

Business owners will lose out on many sales if they do not cater to their customer’s expectations.

Merchant Account Types:

The credit card processing industry is quite confusing with its complex rules. For starters, there are different ways to capture the card numbers in different merchant account types with different rates. The merchant accounts can be broadly categorized into two different account types.

“Swiped” merchant accounts typically have lower rates because it requires a face to face interaction with the customer and their credit card to be physically swiped through a credit card machine when a purchase is made. Retail merchants like your local department store, gas stations, coffee shops, restaurants, hotel or lodging, and mobile merchants with a wireless credit card machine are some examples of swiped merchant accounts.

“Keyed” merchant accounts typically have a higher rate than the swiped account because the customer and the credit card does not have to be present at the merchants place of business, at the time of transaction. The higher rate is a result of more risk that the banks have to assume due to the difficulty in verifying the customer’s identity with such accounts. Phone order, Mail order, and ecommerce website merchants are great examples of keyed merchant account types.

Educating yourself about the Discount Rate:

In understanding the discount rate associated with merchant accounts, you have to understand how banks define the different card types.  From a swiped debit card, to keyed in rewards cards, to swiped business cards; each card type and how it is accepted at the time of purchase is defined in a very specific way, thus has its own specific rate associated to it. Since the banks define over 100 different card types, there are over 100 different possible rates that you can be charged!

Typically, a low rate quote should not be trusted. The companies making such quotes are usually only quoting the lowest rate out of the hundreds that the banks have defined and will ultimately apply to your account when you are processing in the real world.  The reality of it is that the card holder has to have a specific type of credit card and the merchant will need to accept the card a certain way in order to get that low rate.

The low quoting is a tactic that is often used by unscrupulous merchant account companies to get merchants to sign up for their services. Their services also require the merchant to agree to a contract, which can last up to 5 years! Once the merchant is in a contract, the unscrupulous companies typically raise their rates and/or introduce hidden fees. If the merchant realizes the unethical treatment, they would have to pay a hefty contract termination fee just to get out. Either way, these unscrupulous merchant account companies make money regardless!

So buyer beware: If the rate is too good to be true, it probably is!

Deal only with a reputable merchant account company, like United Bank Card.  Get your account by clicking below for a completely FREE consultation and rate quote without any contracts, hidden fees or obligation on your part.

credit card processing and merchant accounts


  • Internet / Mail Order Merchant Accounts
    Complete details on the highest rated merchant account for internet and mail order merchant accounts.
  • Retail Merchant Accounts
    Retail or swiped merchant accounts offer the lowest overall rate of processing. Learn all the details of what types of business qualify for this type of account and what to look out for with other merchant account company's.



Merchant Services