Merchant accounts are contracts by which acquiring banks extend lines of credit to various merchants who want to accept credit card transactions of a certain card association brand. If a merchant does not have a contract, then he or she will be unable to directly accept any kind of payments by certain credit cards such a Visa, MasterCard, Discover Card, etc. When a merchant decides to use an intermediary payment service provider(ex. Paypal), the merchant accounts are held by the service provider.

Merchant accounts can be marketed to merchants using two basic methods: This can be done directly by the sponsoring bank or processor or by a bank’s authorized agent. Marketing details are held by card issuers like MasterCard and Visa, and are enforced by a variety of rules and fines.

Marketing by Banks

When you think of a bank that has a relationship with MasterCard and Visa regarding merchant processing, then this bank is also called a member bank, and it can issue merchant accounts directly to its merchants. In order to reduce risk, there are some banks that will limit approval to merchants based on its geographical area, those that have maintained their business for two or more years and those who have a physical store front.

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