Comparing Merchant Accounts - A Quick Way To Compare Credit Card Processing Accounts
September 9, 2008
Being able to take credit cards is massively important to any company wanting to successfully sell products and services online. At the dawn of online business it was accepted that accepting plastic was not a good idea, because it applying a real world solution to the digital world. Startup companies launched alternative payment methods for example “flooz”, but they didn’t achieve critical mass. Here we are, approximately 10 years on from the launch of businesses online, still getting our plastic out of our wallets to buy on the web and accepting credit cards as payment for products online is still as important as ever.
There are basically two different ways to accept credit cards online. Let’s compare merchant accounts. A business can either sign up for a merchant account, which allows them to process credit cards in their own business name, or they can sign up with a third party solution, who processed the credit card charges on behalf of the business selling the products. Getting a merchant account has higher upfront costs, but has lower per item charges. Using the services of a third-party payment service costs less upfront, but has higher per item charges.
The decision as to whether or not to get a full merchant card processing account or use a third party service provider is only a question of working out which would cost more money. Consider these different business types and compare merchant account benefits…
Usually, merchants who are already trading locally and want to expand online will most likely be more suited to getting a merchant card processing account. Most likely, Usually they will already have an offline merchant card processing account and will tailor that account to add the ability to do “MOTO”, which is “Mail Order Telephone Order” processing and only means that the card holder isn’t there at the time of purchase.
For one-person businesses starting starting to sell on the Internet, it’s strongly suggested that they begin by testing their sales using a third-party payment service. The advantage to the new business is that there’s very little initial cost which means they can test their market cheaply and easily. If sales boom, they can think about reducing the per-sale fees by obtaining their own credit card processing account. If the market isn’t profitable, they can quickly leave the marketplace without having expended much capital to get their own merchant card processing account.