Card Merchant Accounts Allow Credit Card Processing for a Nominal Fee
Credit card and other electronic purchasing methods have become more common over the last several decades. Particularly in the last thirty years, credit card payments have exploded. Now, no business can operate fully without offering some form of electronic processing. In order to successfully accept credit cards, retailers must set up card merchant accounts. Without card merchant accounts, payments don’t process properly and even with the equipment set up, no transaction can actually occur. Card merchant accounts are the behind the scenes piece that make the system possible. The large credit card companies, Visa and MasterCard, have set fees established that merchants must pay in order to offer credit card payments.
Card merchant accounts are what allow Visa and MasterCard to successfully collect their fees. Without the electronic system in place, Visa and MasterCard aren’t notified of transactions, and the money is not deducted from the credit card account holder’s line of credit. This system is what allows revolving credit to function properly. While account holders do, on occasion, spend more than their credit limit, it is rare and usually only by a few dollars. Credit card companies are only able to track purchasing that closely because of electronic communication. As technology has advanced, more and more electronic purchasing methods have become available. While MasterCard and Visa are still the predominant credit card companies, charge card options like American Express and Discover have also become popular. The difference between a credit card and a charge card lies in how the account holder makes payments. The card merchant accounts set up to process charge card transactions are the same, though the fees differ, but a charge card account holder is expected to pay in full at the end of their grace period. With a credit card, the line of credit is revolving, so it is expected that account holders will retain a balance from month to month.
Card merchant accounts are equally able to process both credit and charge card transactions, provided the merchant has decided to accept both payment methods. Because charge card transactions are typically billed at a much higher rate than credit card transactions, many businesses choose not to offer them as payment options. The difference in processing fees can be as much as 300% more for charge cards. Given the significantly higher payment structure for merchants they are often hesitant to offer American Express or Discover as an option to customers. Visa and MasterCard fees are something that many businesses can’t afford not to pay, but the higher fees for charge cards are not as mandatory in today’s marketplace.
Card merchant accounts that process Visa and MasterCard are necessary to process not only credit cards, but also to process debit check card transactions. The fee structure for debit credit cards is the lowest and comparable with a most qualified card on the fee structure, which means the normal percentage that most businesses will pay for these transactions in only around 2-2.5%. This is a negligible fee that many businesses recognize as a cost of doing business. So many customers fail to carry cash that not offering some form of electronic payment is impossible in the current marketplace.
