If you have an online business with an option to buy services or goods, you'll be using a merchant account for your transactions. Depending on your actual business needs, you'll also probably be using one of three specific credit card processing programs. Even if you're not using a merchant account at the minute, it's useful to know what these programs are and what the difference is between each one.

The three different merchant accounts are retail, MOTO and Internet (MOTO is short for Mail Order - Telephone Order). Although you can actually have all three accounts in use at the same time, this largely depends on the size of your business. After all, it's unlikely that a small, one-man business with very little online presence will use the retail merchant account. So what exactly are these different credit card processing programs, and which one would be best suited to you?

Retail Merchant Account

This is an ideal credit card processing program for someone who is looking to have the least expensive merchant account. Because the card owner has to be present when the transaction is carried out, there is less chance of fraud happening. This in turn leads to the merchant account being eligible for lower rates, due to the decreased risk involved in having a retail merchant account.

Although online transactions are becoming a lot more popular, there is still a huge market for this type of merchant account. The most likely businesses that use this type of credit card processing program are grocery stores, supermarkets, restaurants, bars and hotels - anywhere where you have a physical service transaction.

MOTO

Short for mail order-telephone order merchant accounts, this type of transaction may be extremely versatile, but it's also one of the most expensive. This is due to the ability to take the credit card payment over the telephone - without the actual cardholder standing in front of you, the risks obviously become higher.

Although initially set up to help mail order companies accept payments for goods in their catalogue, this type of credit card processing program is now available in a myriad of ways. For example, you can call up and make a purchase from an online store or retailer, as well as book concert tickets and airline flights. The amount of potential for fraud with this type of merchant account is high; therefore any providers of this service will charge much higher interest rates to cover the risk factor.

Internet Merchant Accounts

This type of account falls somewhere in-between a retail merchant account and a mail order-telephone order one. Again, this is what could be classed as a "faceless" type of account, since all the purchasing, payment and order details are conducted online. However, unlike the credit card processing program that MOTO uses, an Internet merchant account is slightly less expensive, since there are a few extra security measures in place when it comes to using it.

For example, although there is no physical transaction - because the purchase or order is being made online - this doesn't particularly mean that it's not a safe option. The credit card processing programs used for online purchasing use SSL software, a highly secure and encrypted network tool that is designed to keep your information protected.

As well as this, any computer that is connected to the Internet has a computer user number, or ISP. This is a code that shows exactly where the computer is plugged in, and what home or area it's located - it's pretty much like having a little transmitter that tells you something's exact position (think police trackers). So, if any type of fraudulent activity is carried out, the merchant account can track the details back to the originating computer.

Of course, this isn't a failsafe method, and because of this the rates for this type of merchant account are closer to a MOTO account than a merchant retail one.

Another aspect of Internet merchant accounts is that they normally come with extensive services, such as a payment gateway for accepting credit cards, and a shopping cart for the all-important purchases to be made. There are many other features as well, like front-end design and backroom support, so although a little more expensive, an Internet merchant account is fast becoming one of the most popular types of credit card processing programs around.

Choosing the Right Merchant Account

If you're just starting up in business and money is tight, it might be tempting to go for the cheapest type of merchant account, which would probably be the retail merchant account. However, although you might save a little on monthly expenses, you may lose a lot more in missed sales opportunities and orders.

This is because you need to choose the account that's right for you and your business. If you're a one-man band and you're working virtually from home, then an Internet merchant account or MOTO would probably be best. Obviously, if you have a physical storefront, then a retail merchant account might be the best option.

Taking the time to look at all the options available, and what features they have that will be applicable to YOUR business is the best way forward. By doing this, you will ensure that not only do you have a credit card processing program in place that's right for you - it'll also be right for your customers. And with the extra sales that will bring, any additional cost for the right merchant account will be more than worth it.