Setting up a merchant account for credit card processing
Merchant accounts are nothing but bank accounts making it possible to accept and transact with credit cards. However, the similarity with the checking or savings bank account ends there. These are special types of accounts and are more or less like a contract between the bank providing the account and the dealer with rules about the products and services that are sold and processed.
Merchant accounts may be over the counter or account by order where telephone or other communication mediums are used. In both cases the credit card processing requires a paid or free credit card machine. The two types of accounts are called OTC and MOTO in brief.
Fees are comparatively lower in OTC and the credit cards produced by the customers who are mostly physically present are swiped through the paid of free credit card terminal for checking. The MOTO charges you higher fees since it involves two steps instead of one for processing the card and since the risks of fraud is higher in this case.
MOTO is more appropriate for Internet based account. The customer will enter the credit card information on a secured form and the data is transmitted online for verification and authorization. Either the card is directly charged or the money is retained in a holding account and the card is charged when the delivery is made. In these cases there is no direct involvement of any credit card terminal.