Merchant services is a term used to describe a variety of services that enable businesses to carry out financial transactions, from credit card processing to checking validity of cheques. One of the most essential merchant services offered by most major merchant services providers is merchant accounts. Merchant accounts are specialized accounts that allow businesses to receive credit card payments, or carry out financial transactions online. Depending on the type of transactions, the volume of transactions and other parameters, different businesses are eligible for a variety of merchant accounts. Once a merchant is designated a merchant account, the merchant (read business) is then educated in the ways he can access the merchant account and is also sent a complete list of the charges that are associated with the merchant account.



There are essentially three types of merchant accounts based on the volume, and type of transactions that businesses encounter:

a) Standard Merchant Account

As the name suggests, standard merchant accounts are the de facto standard, and are the most basic and also the simplest type of merchant accounts. Standard or regular merchant accounts, usually have a certain amount of transaction fee, setup fee and interchange fees associated with them. Standard merchant accounts are assigned to a majority of small businesses, or online businesses that do not experience high transaction volumes. Irrespective of the company that offers the merchant account, standard merchant accounts usually have the same type of fees and rates associated with them.

b) High risk Merchant accounts

High risk merchant accounts are assigned to businesses that have a high volume of financial transactions (especially transactions that have a vast majority of payments through credit cards). The setup fees for high merchant accounts is usually nominal or zero. A very good example of a business that would be assigned a high risk merchant account are online casinos. Online casinos usually have a high non pay ratio, and since online casinos are not restricted by geographic boundaries, the transactions are usually in multiple currencies, high risk merchant accounts offer specialized merchant services like real time payment processing, fraud protection, account management and customization of the merchant account to cater to similar businesses.

Not just online casinos, almost all major commercial stores like Wal-mart, Starbucks will automatically be offered high risk merchant accounts, as they deal in millions of dollars across multiple locations every day.

c) Specialized merchant accounts

In the event that a merchant requires a specialized account that does not fit in the above mentioned categories, he/she can approach the organization offering the merchant account, and apply for a specialized merchant account, the setup charges associated with specialized merchant accounts are usually high, and more often than not a lot of paper work involved in acquiring a specialized merchant account.

No matter what merchant account a business is assigned, life is much simpler once a business decides to use a merchant service provider that can get them value added services, not just merchant accounts. Today most merchant service companies usually offers a host of other services in addition to just merchant accounts. However the one service that all businesses require for an effective online or credit card transaction system, is a merchant account; irrespective of the nature of the business that they are engaged in.

Other Merchant Services

Apart from a payment gateway there is a specialised service called the ACH (Automated clearing house), ACH is a electronic network for financial transactions that is regulated by the US government. The limitation of any payment gateway is that it does not cater to financial transaction like e-checks, federal state and tax payments etc. ACH is designed for businesses that are usually offering financial services like book keeping, taxation etc. ACH access is offered by all major merchant services providers, and is essential for businesses that are involved in financial domains like chartered accountancy. Incidentally, there is only one non-governmental company that offers ACH.