Merchant Accounts and the Payment Card Industry (PCI)

Merchant Accounts And PCI

One would be hard pressed to find anyone in the United States or around the world that doesn’t have at least one credit card in their wallet. Whether you have one or ten credit cards, chances are you have used it to purchase something recently. I can only speak for myself, but I am still amazed (and sometimes annoyed) when I go to pay for something with my credit card just to be told “We don’t accept credit cards” or “Sorry cash only.” The first words out of my mouth are always “Why don’t you accept credit cards?” and I have noticed time and time again that the reasons these merchants give never make any sense to me.

Merchant Benefits

The majority of merchants seem to have no idea just how beneficial accepting credit cards can be for their business. If they just took a little time to learn how the Payment Card Industry works, I am sure I would hear a lot fewer negative comments. There is a common misperception that accepting credit cards or opening a merchant account is expensive, time consuming and just not really worth it. For every merchant that has turned away a paying customer because they wanted to pay with a credit card I ask, “Can you afford not to take credit cards?” More often than not I find myself spending some time with the merchant to let them know what the benefits to their business could be and also explaining the simple process of getting a merchant account.

Once they realize that the main reason they’ve had for not opening a merchant account is incorrect or misguided they want to know more and always have some degree of questions for me. I typically try to find out what their concerns are, begin at the top and work my way down starting with the major credit card companies we are all familiar with and ending with their customers – all the while answering questions along the way.

The big credit card companies are not an actual bank as many think, but have relationships with many different financial institutions, the most common being what you and I think of as a traditional bank. In the Payment Card Industry these are referred to as “Member Banks” or “Acquiring Banks” and have been approved by the credit card company to issue merchant accounts based on certain criteria. The guidelines and requirements are set by the credit card company themselves and must be agreed upon in order for that bank to become a “Member” of said company and therefore qualified to approve accounts allowing merchants to accept that type of credit card. The biggest of these is of course Visa and I will use Visa as the standard for demonstrating any examples. So up to this point we have Visa and a bank that has been accepted as a member of Visa and thus is now considered an “Acquiring Bank”.

Once a bank has been approved by Visa they are able to qualify and approve businesses for merchant accounts. These banks often times also create relationships with other companies to generate more business or to cover a larger demographic or geological area. Since the bread-and-butter for most banks is not in merchant services or the merchant account sphere, many encourage other companies who focus entirely on merchant services to become “registered” with them. In the Payment Card Industry (or PCI) these companies are referred to as “Processor’s” or “Service Providers” and are to able to approve merchant accounts assuming they meet the agreed upon criteria.

Ultimately, the merchant has the final say as to whether or not they are going to accept credit cards as one form of payment for their products or services. The ability of a merchant to accept payment via credit cards is getting safer, faster, easier, and more accessible everyday. The Payment Card Industry is committed to providing the largest array of credit card products, services, and solutions possible in these days where plastic is King.

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