Merchant Account: A merchant account is a banking account that allows you to accept credit payment for your merchandise or services. This account takes the payment from credit cards and places the money in your checking account. Generally merchant accounts charge minimum monthly fees and reporting fees.
Discount Rate: This is the percentage of the order total that is taken by the merchant account and credit card company. This is generally between 2.2% and 3.5% but can vary depending upon the kind of internet sales you do, the average sale amount and the type of credit card you accept.
Transaction Fee: This is a small amount, usually 10 to 30 cents, that is charged for each transaction through the processing company. Transaction fees are generally charged by the payment gateway and/or processing company.
Payment Processor: A payment processor is the service that actually does the payment processing. The service checks that the buyers credit card is valid and that there is sufficient funds available for the order. If so, it processes the payment, crediting your merchant account and debiting the buyers credit card account.
Payment Gateway: A payment gateway is an interface between the order and the payment processor. If you have a retail merchant account with a card-swipe machine, that machine is the gateway between the order and the payment processor. Other types of payment gateway include online order entry websites and programs that run on your website. Gateway fees vary depending upon the gateway.
