What's a Merchant Account?

A merchant account is a processing arrangement with a credit card processor; where the processor agrees to let you accept Visa and MasterCard payments and agrees to deposit those funds into your current bank account. A merchant account is not a bank account nor does it store funds. Since a merchant account is an arrangement with a specific processor, merchant accounts cannot be transferred between providers.

At Helcim, all of our payment processing solutions come with a built-in merchant account for Visa, MasterCard, and Discover. By offering an all-in-one processing solution, we make it easy and affordable to accept credit card payments.

Diagram of how a merchant account works.
Diagram of how a merchant account works.

How does a Merchant Account Work?

Step 1  |  Customer Pays Merchant

The customer (officially known as the cardholder) provides his or her credit card information to the merchant. This could be done using a physical terminal, a mobile app, a website or a virtual terminal. All of these merchant solutions are identified as "terminals".

Step 2  |  Terminal Connects to Processor

The "terminal" connects to the credit card processor (Helcim) with an authorization request. These requests usually include the credit card number, expiry date and amount, and can also include additional information such as the CVV security code, invoice number, billing information, and so on.

Step 3  |  Credit Card Processing

The credit card processor (Helcim) determines the type of credit card being used and connects to the appropriate network (the "card-brand network"). There are numerous credit and debit networks, including Visa, MasterCard, Discover and American Express. The processor needs to maintain a secure connection to each one.

Step 4  |  Transaction is Approved

The card-brand network then identifies which bank (the "issuing bank") the credit card belongs to, such as your local credit union. The card-brand network will contact this bank to determine if the credit card is valid and has the appropriate funds. Once approved, the approval code is sent back to the processor and back to the terminal.

Step 5  |  Merchant Receives Funds

At the end of the day, all the processed transactions are grouped together and deposited directly into the merchant's bank account. Most processors can deposit to any bank account of the merchant's choosing.

Benefits of a Merchant Account

Merchants of all size gain financial advantages with a certified merchant account:

  • 2-Day Bank Settlements

Your processing account is linked directly to your bank account, with processed funds transferred within 2 business days of your settlement.

  • Process Under Your Operating Name

Customers only see your business' operating name on their credit card statements, reducing confusion and boosting your brand.

  • Better Financial Control

Through your merchant account, you get more control in the event that a customer disputes a charge, with a 30-day window to provide a rebuttal.

With a merchant account, you are equipped with everything you need to accept credit cards online or with a keyed-in transaction. Collecting payments from customers can be done all over the world in any currency of your choice.

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