You have probably heard about them on the news or the internet, and still many people sit back and wonder what in the world ‘merchant accounts’ could be. To make things easier on you, they are simply a way for businesses to accept credit cards from consumers, whether it's online or offline. In doing so, it makes a potential buyer's shopping a lot easier by either giving a credit card number or swiping it on a machine at their local store.

This brings us to the two major kinds of merchant accounts; internet merchant accounts (IMA) and retail merchant accounts (RMA). Seriously, could you imagine if you found something you wanted to purchase online, but they only accepted checks? Not only would it take up to a week to get there, but another week for the check to clear, and 3-5 days to be shipped to your house. Instead, with a merchant account, companies can process your credit card at that moment and ship out your product the same day, depending on what you buy, of course, and at what time.

These are the necessities for businesses today, to keep up with other companies in a competitive world. Consumers are realizing that is can be cheaper to purchase things online, rather then driving around the malls on a Saturday or Sunday afternoon. With billions of dollars going towards internet sales each year, it is only a matter of time before having a merchant account will be a virtual necessity for all online businesses.

Retail merchant accounts work almost the same as IMAs, except you are in a store and most of the time you are required to swipe your credit card. Buyers who own a credit card are known to spend more money, which makes a merchant account a great tool for the store owner.

The next question that's heard a lot revolving around merchant accounts is what actually happens when a credit card number is processed? You may be reading this thinking, "Doesn't everyone know this already", but even with all the sales online, you would still be surprised how many people still don't understand how processing works.

So to clear some of this up, once you swipe your card or give numbers online, they are sent through a secure socket layer (SSL) to what is called the payment gateway. Remember this all happens in a matter of seconds and if you are purchasing online, you will receive an email as a receipt for your purchase. Usually it's a "Thank You for Your Purchase" email or something similar, which you can store away if something is wrong with your purchase or product.

At the same time, all the information is sent to the merchant bank for processing, with the amount of the purchase being deducted from your debit or credit card. The merchant receives his money directly into his business checking account, after the merchant bank and processing company deduct their fees, usually 2 or 3 days later. As an online consumer, all you have to worry about is providing your information correctly and pushing the submit button. Once this is done everything is encrypted for security reasons, so hackers won't be able to get to your personal information.

In the end, we hope you have a better understanding about what exactly merchant accounts are and why companies use them. Having this knowledge allows shoppers to feel more comfortable and secure with the transactions taking place, whether they are on or off line. Hopefully after reading this, you feel that way as well.