If your business wants to accept credit card payments directly from your customers, you will need a merchant account. A merchant account is a formal agreement between a business and a credit card processor who will process the credit card transactions submitted by the merchant and electronically deposit the associated funds into the merchant's bank account.
There are numerous types of merchant accounts and the specific type needed will be dependent on your geography, industry, business model, and how you wish to process payments:
If you run a retail business with a storefront or some physical location, you will most likely process credit card payments using a retail merchant account and card-swipe terminal that will transmit the transaction data to the credit card processor for approval. Most retail establishments are considered low risk because there is a physical credit card present at the time of sale.
For ecommerce sales, phone orders, fax orders, mail orders, or any time there is no physical credit card present to swipe at the time of sale, an Internet Merchant Accounts, which are also called "MOTO" (Short for "Mail Order / Telephone Order") merchant accounts are required and transactions will normally be processed using an Internet Payment Gateway. Internet & MOTO merchant accounts are considered a higher risk than retail merchant accounts because there is no credit card present at the time of sale, increasing the potential for fraud.
If your business is considered to be in a high risk industry, or if you've previously had a merchant account terminated for violating the merchant agreement, you'll likely need to have a high risk merchant account. The reason an industry is considered "high risk" is usually because the industry is prone to high rates of chargebacks and, in addition to things like adult entertainment, even include businesses such as Travel, Nutraceutical, Technical Support, and many others.
Businesses located in the USA can qualify for US credit card processing if: 1) The business has a US address and EIN, 2) The business has a US Bank Account, AND 3) The signor/guarantor on the application, which does not have to be the business owner, has a US social security number. If any of those conditions can not be met, the business will need an International Merchant Account. Whether a US or an International merchant account, the business will be able to accept credit cards from anywhere in the world as long as the credit card has the MasterCard or Visa logo. US merchant accounts are available for both low risk and high risk businesses, however, it's important to understand your risk level and work with an appropriate processor.
Businesses located outside of the USA, or that cannot meet the requirements for a US merchant account, will require an International merchant account. Some businesses that may meet the requirements for a US merchant account may also find it desirable, or necessary to secure an International merchant account. International merchant accounts are available for both high risk and low risk businesses, however, by nature, International merchant accounts are a higher risk than US merchant accounts. This is because outside of the USA, they don't use social security numbers, which means there's usually no credit check associated with an International merchant account and it becomes more difficult to track people down in the event of problems. Along with this higher risk usually comes higher rates and slower payments than a US merchant account.
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.