What is a Credit Card Merchant Account?

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  • Written By: N.M. Shanley
  • Edited By: Michelle Arevalo
  • Last Modified Date: 03 November 2019
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Retail vendors can open a credit card merchant account to accept and process credit card payments. The vendor must file an application with each network for the different types of credit cards he wants to accept. Some popular networks include VISA®, MasterCard&reg:, American Express®, and Discover®. Vendors can submit these applications through a bank or other credit card processor.

When the credit card merchant account is approved, the seller will be given a merchant number. When a customer uses a credit card, the processor will forward the payment request to the appropriate network. The network sends this request to the customer’s bank. If the bank approves the transaction, payment is forwarded to the merchant’s bank account, which is attached to the credit card merchant account number.

Several fees are associated with a credit card merchant account. These can include application costs, monthly service fees, and transaction charges. A transaction charge can be a flat fee or a percentage of each sale. For online merchants, a gateway fee may be charged as well. A gateway is a secure web page that encrypts customer’s credit card information before it is sent to the merchant over the Internet.

Usually, network and processor application fees are non-refundable. Vendors can keep their merchant accounts in good standing and maintain network approval to avoid paying additional application fees. Networks may suspend or revoke credit card merchant account approval for sellers with a history of consumer complaints or fraudulent activity.


Credit card processors can add other fees based on a vendor’s credit card transaction history. Vendors with a history of chargebacks may have higher transaction fees charged to the credit card merchant account. A chargeback occurs when the customer disputes a credit card charge, and the bank credits the customer’s account.

Generally, the bank will contact the merchant for additional information before processing a chargeback. Merchants can help avoid chargebacks by maintaining proper records for all transactions. Responding promptly to all bank inquiries can also help limit chargebacks.

Following security procedures recommended by banks and networks may also help avoid chargeback fees and fraudulent transactions. In retail stores, merchants can ask for valid identification before accepting a credit card for payment. Online merchants can require that customers enter their credit card expiration dates and security codes on the secure payment page.

The merchant’s sales volume can also help lower transaction fees. Typically, credit card processors charge lower credit card merchant account transaction fees for stores with higher volume. Vendors with low sales volume may choose to use payment options offered by bulk processors, such as PayPal™ and Google™.


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