There are three types of merchant accounts: retail, mail/phone order, and Internet. The differences between each of these accounts are the transaction fees and the rules connected with each account. Commonly some business have more than one merchant account.

Retail accounts charge the lowest fees, but enforce very strict guidelines. Retail merchant accounts require a high percentage of credit card transactions to be conducted by passing the credit card through a physical credit card terminal. Retail accounts are associated with restaurants, hotels, and grocery stores.

Mail/phone order  accounts are processed with a higher transaction rate compared to retail accounts and are used without credit cards being present. mail/phone order accounts are great for companies who receive all of their sales by mail or telephone.

Mail/phone order merchant account process credit card payments by entering the card information into a terminal, by using terminal software installed on a personal computer, or  a virtual terminal that allows the merchant to the internet to process transactions on a payment service provider's Web site.

Internet accounts are similar in cost and often times the same rules of usage for mail/phone order account are applied. Most banks issue a mail/phone order merchant account to businesses conducting transactions over the Internet, however some banks require a separate Internet merchant account, to address the unique needs associated with this type of credit card transaction.