What is an ISO or Merchant Account Provider?

A merchant account is required for any business who accepts credit cards. This account allows you to accept credit cards as a form of payment for merchandise and services. The technology that is needed for this is not always available from Banks so you must seek other alternatives such as a merchant account provider. These are called ISO’s or Independent Service Organizations that act as a go between for the owner and bank. Banks use ISO’s when they lack the technology to provide the necessary service for a business. You can use the ISO and eliminate the bank and the additional fees they charge for setting up your account.

Entities Involved in Deciding your Merchant Account Application

There are actually two entities that participate in the consideration of your application; the ISO and the underwriter. Many times the ISO is also the underwriter and they evaluate the success and risk of you and your company. They will either approve or deny the account. Approving means you are in one of four risk levels from 1-low risk to 4-high risk. Violations of your merchant account agreement may cause fees to be applied raising the risk level and/or the closing of the credit card processing account. Check out the account agreement before settling on an ISO. This will ensure your awareness of the terms of your use of the ISO.

The Three Faces of Merchant Accounts

Three different merchant accounts are available; OTC or over-the-counter, MOTO or Mail Order/Telephone Order and Internet. An OTC account is used for retail merchants that physically use a cash register or terminal to process credit card purchases. They hold a low risk account and get discounts in transaction fees and rates. A MOTO account is used by companies that are unable to swipe a credit card. This is a high risk merchant account because the information is transmitted via computer or phone and it cannot be verified. Internet accounts are used only for internet transactions. The actual processing is done via a virtual terminal or payment service gateway. These too are high risk accounts.

For further details on credit card processing visit www.stradafee.com.

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Article Source: Merchant Account Credit Card Processing Overview