04 September 2009

4 Differences between a Merchant Account and a Regular Checking Account

A merchant account and a regular checking account differ on the basics, the providers, the main types and the methods of processing.

Nowadays, people would rather travel light and that doesn’t entail just a long journey. Most would prefer leaving cash funds to the bank and just carry a check or a credit card to be a more convenient substitute. Let’s know how the two differs on the following context:


A checking account revolves around the use of checks as an alternative for cash funds. A merchant account, on the other hand, let business owners receive payments via debit or credit cards.


A checking account is a service offered by monetary organizations such as banks, savings and loans businesses, credit unions, lending firms to name a few. A merchant account is provided by a bank, credit card company or payment processor.

Main Types

The main types of a checking account are regular, lifeline, internet or telephone-enabled, overdraft, high-interest, and reward current account. Regular checking account presents the basic financial amenities depending on the granting bank. A checking account known as a Lifeline, on the other hand, reduces fees for the good of the aged, below income, or even to schoolchild clients. Internet or telephone banking services for a checking account is offered by banks to give convenience to their customers. You may see your bank reviews online. Overdraft checking account comes to the picture when the holder of the account writes a check larger than the available account balance. You will not also be charged with an overdraft bank fee instead you will have to pay with interest. High-interest accounts are characterized by its high-interest dues but with a maximum limit to their balance. Reward accounts for checking offers exceptional incentives to actions such as bank deposits that are direct, bill payments, a specific debit card quota uses and the employment of Internet banking service for statement of accounts.

Moving on, the main categories under merchant accounts are retail, MOTO, and Internet accounts. Retail merchant accounts have the lowest fees and it is done through the card being swiped. MOTO stands for Mail Order- Telephone Order. It charges a larger transaction fee and it is distinguished when the card isn’t physically available for swiping. Internet accounts are used only for Internet transactions.

Methods of processing

Basically, a checking account holder handles transactions through writing a check. He writes the monetary amount and the use of the transaction. Afterwards, he signs his name on it which guarantees that it will be paid fully and on time. Checks may also be post-dated but with a validity of a month’s time. However, merchant accounts are more complicated. It may be processed through credit card terminal, ARU, payment gateway, Level 2 or Level 3 Processing-Purchasing Cards, Merchant Account Marketing, Marketing by Banks, and Marketing by ISO or MSPs. A credit card terminal uses the “swipe” means or you may also key-enter the required information of your credit card to process the transaction. An ARU or Automated Response Unit authorizes a credit card transaction over the cellular or land-line telephone. A payment gateway is applicable for businesses over the web and for online retailers. Level 2 or Level 3 Processing-Purchasing Cards are only used by government agencies to serve their providers and suppliers. Merchant account marketing can be processed through a processor or sponsoring bank, or by a consented agent for the bank. Marketing by Banks can release merchant accounts immediately to merchants. Marketing by Independent Sales Organization (ISO)/MSPs must have sponsorship by a member bank for verification of the financial stability and appropriateness of a supposing client.

Probably, knowing the difference between the two will help you choose whether to get a checking account or a merchant account. It’s now up to you to choose.

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