Retail Merchant Accounts - Quick Overview
Posted by Jeff Shavitz on Tue, Jan 12, 2010 @ 01:59 PM
Retail merchant accounts carry the least amount of risk to the credit card processor. Because retail merchant accounts are considered low-risk, they are given the lowest rates and fees.
In order to find the best merchant account you should first learn how the different qualification rates will affect your business.
Retail Merchants
In order to qualify for a retail merchant account a business must be able to transact the majority of their credit card sales by swiping a customer's card through a credit card machine. This act is referred to as electronic data capture. Most processors will require a merchant to transact at least 80% of their sales via electronic data capture to qualify as a retail merchant.
Retail Credit Card Processing Rates
Retail merchant accounts pose the least amount of risk to a processor and therefore carry the lowest qualified discount rates. The qualified discount rate will only apply to transactions that are run using electronic data capture (swiped transactions). Any transaction that must be keyed-in will run at a mid or non-qualified rate.
If you will not be swiping the majority of your transactions you should not apply for a retail merchant account due to the downgrading of transactions described above. Instead, you should apply for a mail order merchant account.
If you are a retail merchant you should also give some thought to purchasing a pin pad in order to run debit cards at a flat per transaction rate. Knowing when to use each card can save considerable money.
Retail Merchant Sub-Categories
Certain business types qualify as retail merchants because they swipe the majority of their credit card transactions, but are assigned separate merchant accounts due to an inherent high or low risk associated with the business type.
Lodging businesses such as hotels, motels, and bed-and-breakfast establishments must utilize a lodging merchant account for their processing needs.
Grocery stores are able to utilize a grocery merchant account which has the lowest rates and fees of almost any merchant account due to the inherent low chargeback rate in the grocery industry.
Article courtesy of: Merchant Council (www.merchantcouncil.org)
To learn more or to find out how much you can save on a retail merchant account, get a free rate analysis from CCS today.