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Merchant Account vs. Payment Gateway: What's the Difference & Which Do I Need?
Internet merchant accounts or Ecommerce merchant accounts are also called a "MOTO merchant accounts" and are a specific type of merchant account that allows for the processing of "card-not-present" transactions. Card-not-present refers any credit card transactions where there is no physical credit card to "swipe" through a card-swipe terminal and includes mail order, phone order, fax order, and Internet order. In many cases, it will also include mobile order.
Specifically, "MOTO" refers to "Mail Order & Telephone Order" but in fact, a MOTO merchant account will include all card-not-present transactions and an Internet merchant account (or MOTO merchant account) will allow you to accept credit card payments online by allowing your customers to enter their credit card information directly into your website which enables you to accept credit card orders without your customers having to fax, phone or mail in their orders.
By using an an Internet Payment Gateway with a "Virtual Terminal", you can also process fax, phone, and mail orders, in addition to Web orders. Unlike using PayPal or another third-party payment service, the customer is never redirected away from your website during the purchase process.
Merchants do not have to use a payment gateway with an Internet merchant account. Credit cards transactions can also be processed using credit card processing software or a credit card processing terminal. With these methods, the transaction is manually entered by the merchant after the time of purchase and not processed in real time.
Even if you have a retail merchant account and plan on using a credit card terminal to process credit card orders, you will still need an Internet merchant account if you want to take orders online via your website. How the order is entered is really not significant. It's how the order is received that determines the need for an Internet merchant account or not.
If you currently run an off-line business and you already have a merchant account, you will probably still need to apply for an Internet merchant account to begin taking online orders since Internet merchant accounts tend to have different rules and regulations than standard retail type merchant accounts do. If you attempt to circumvent these rules and begin processing Internet orders a standard merchant account, you run the risk of having your merchant account suddenly shut down by your merchant service provider.
Because an Internet sale is a card-not-present transaction, there is a higher risk of fraud associated with web-based credit card payments so more stringent processing procedures and a separate Internet merchant account are required by merchant providers.
If your business is located outside of the United States, or is involved in "high-risk" transactions such as nutraceuticals, online gambling, software downloads, adult entertainment, online technical support, and MLM, High Risk Merchant Accounts will most likely provide the only available solution for processing your credit card payments since most US payment processors typically will not accept high risk merchants.
Regardless of whether you're an established merchant looking to add an Internet merchant account or a new merchant, you should work with an experienced merchant account provider like CyoGate that has expertise in effectively securing and handling Internet merchant accounts.
An Internet Merchant Account is sometimes referred to as a "MOTO" (Mail Order & Telephone Order) Account because they all require the ability to process a credit card payment when there is no physical credit card present to be swiped. A standard retail "swipe" merchant account does not allow processing of these "card-not-present" transactions.
If the domestic banks are denying your merchant application because they believe your industry is considered high risk, CyoGate can help! We have an offshore network of merchant processing partners that enable us to provide low cost, high risk merchant solutions to a much wider range of businesses and industries.
The CyoGate Internet Payment Gateway offers one of the quickest and most cost effective ways to accept and process credit card and electronic check payments online. Our payment gateway works with most existing merchant accounts and supports hundreds of popular web shopping carts and eCommerce platforms.