From Chapter 6: The Product
MC/VISA
Basics of Accepting Credit Cards
The basics of accepting credit cards are that you need a merchant account (bank) and a credit card terminal (gadget or software that enables someone's credit card to be used to make a purchase); add a payment gateway if you want to accept credit cards on your website or an outdoor arts festival.
The merchant account is an arrangement with a financial institution that allows you to accept credit cards, also known as credit card processing. Part of this arrangement is that you pay all sorts of fees ranging from one-time to annual to monthly to per-transaction.
The credit card terminal is either a mechanical machine that slides over the credit card making an impression onto a transaction slip (not-so-fondly referred to as a knuckle buster), a keypad machine into which you type the numbers and contact information of the buyer (your laptop can also act as a keypad credit card terminal), a swipe machine (swiper) which you/the buyer slides through a slot on the side as it automatically notes the necessary information, or a Virtual Terminal (you login to your merchant account through your computer thus using the computer as the terminal). Ideally, you will have real-time access to the Internet via a telephone line—land or cellular.
Merchant Accounts
Absolutely nothing is easy when it comes to figuring out the best type of merchant account to open. There are at least five different kinds of accounts: retail, Internet, mail order, store-and-forward, and wireless. The retail expects that at least 80% of your transactions will be through a dedicated credit card terminal. The Internet requires both a merchant account and a payment gateway although some companies such as PayPal 13, 2Checkout 14, and ClickBank 15 will act as both; be cautious about taking on an Internet account with a standard bank as opposed to a merchant service (unless this is a one-off arrangement). Banks tend to see an Internet account as too scary and will charge you accordingly. Mail order is usually considered a card-not-present situation and must be punched in via keypad (card-not-present and using a keypad are charged higher rate fees). Store-and-forward is for situations