Which Merchant Account Is Right for Your Business

It is obvious to say, but to make the most money you must accept all manners of payment. Cash only is fine for the lemonade stand, but if you want a business that can afford you more than a baseball card collection you need to accept the today’s most popular payment method: credit/ debit cards.

Now that it is necessary to have a merchant account, which merchant account type is right for your business? There are three types: card-swiped account, keyed-entry account, and virtual account. The distinction between each depends on how the transaction is brokered with the customer and each has both its benefits and costs.

Card-Swiped Account

Designed for your typical brick-and-mortar business, the card-swiped account takes care of the customer right off of the street. If you transact 90 percent of your business in person with your customer and sell non-recurring services or products, the card-swiped account is right for you.

Because the card-swiped account has the most security built into it—because the card must be present for the transaction—this account is usually the cheapest account. However, limiting your account to card swiping may result in loss of the sale if your customer’s card has a damaged magnetic strip. This account definitely cannot help your business online.

Keyed-Entry Account

Keyed-entry accounts work best for smaller businesses but for businesses that still cater mainly to a present customer but allows transaction over the telephone. Without swiping capability, the transaction involves keying in the card number and imprinting (though this is not mandatory) the card at the time of the purchase. If you see your customer face to face less than 90 percent of the time and if you do a considerable about of business over the telephone, this may be the best account for you.

Today, as customers become more and more protective of their identities and card numbers, keyed-entry accounts may be acceptable in an established mom and pop store, but for most businesses, this account is best suited to catch the transactions off of damaged cards or add additional business over the telephone.

Virtual Account

The virtual account handles transaction wherein the customer is not present. This includes telephone and mail order but, today, is mainly associated with e-commerce. Because this account is set up to request the most information possible from the customer, it is ideal, as well, for businesses that have recurrent sells.

The least secured and most vulnerable to identity theft and disputed purchases, the virtual account is generally pricier—both in merchant account provider fees and criminal loss. However, unless you intend only to serve the community on Main Street, Your City, denying your customers Internet shopping may rob you of more money than the account or risk involved.

When choosing your merchant account provider, understand who your business services. Let your customer base decide your protocol for business.