If you want your business to accept credit cards, either online or at a brick-and-mortar establishment, you will first need to open a merchant account. A merchant account is a business bank account, and you can usually open one at most banks. Merchant accounts are especially important when it comes to dealing with credit card companies, as they provide identity verification, preventing fraudulent merchants from abusing customer credit cards. Merchant accounts are also required to process credit cards.

When you apply for a merchant account, the bank will need to verify your identity, as well as your credit and business history. You must also provide a verifiable address for your business, even if you only plan to open an online store. This keeps merchants accountable for their actions, as it prevents fraudulent merchants from hiding behind anonymity. Once your address, history, identity, and contact information have been validated, your next step is to configure your account to process credit cards.

Choosing Credit Card Merchant Accounts

If your store is in "the real world," as opposed to cyberspace, you will need a credit card terminal. A terminal is a machine, usually placed next to a cash register, that can read credit cards, as well as provide verification. Credit card terminals are equipped with magnetic strip readers, which decrypt the information on the card. The terminal is linked, via your merchant account, to a database, from which it then pulls the cardholder's information. After comparing the information, the terminal then approves or denies the card, based on the information provided by the database.

If you operate an online store, you will still need a credit card terminal, albeit the virtual kind. A virtual terminal is a software application that is stored on your site's server. You will also need virtual shopping car software installed on your site. The virtual shopping cart provides an interface on a customer's browser, through which they can transmit their credit card number and personal information to your sit. The virtual terminal on your server acts just like its physical counterpart, and transmits the information to a database maintained by a third party organization. In order to conduct a secure transaction using a virtual shopping cart and terminal, your site must be secured by digital certificates. In order to obtain a digital certificate from a certificate provider, you must have a merchant account.