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Merchant account provider services – How it works

Accepting credit card payments requires multiple components. Between a paying customer and your bank account, there are three layers that exist:

Payment Gateway – This is a unique code specific to you that will transmit your customers order to and from a merchant account provider. The payment gateway provides you the ability to accept customer billing information (such as the credit card number, credit card type, expiration date, and payment amount) and the necessary validation steps that must be followed before the credit card is actually billed.

Merchant Account – A merchant account is an account with a financial institution or bank, which enables you to accept credit card payments from your clients. The payment gateway actually transmits the billing information to the merchant account provider. Unfortunately, most local banks do not provide merchant account capabilities.

The main reason why most local financial institutions or banks do not want to provide merchant accounts is because transactions conducted over the internet are totally different from face to face transactions where a signature is required to authorize the purchase. This makes online transactions prone to credit card fraud. Fraud protection should be one of your primary considerations when choosing a merchant account provider.


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