Merchant Account Comparison - A Quick Way To Compare Credit Card Processing Accounts
September 29, 2008
Being able to take credit cards is very important to any business that wants to actively sell goods and services on the web. When businesses started selling online it was thought that accepting plastic was a bad idea, because it applying a real world technology to the digital world. Startup companies offered e-currencies eg “flooz”, but the web-based currencies didn’t flourish. The truth is, ten years on from the launch of businesses online, still typing in credit card numbers to buy online and accepting credit cards when offering goods online is still hugely important.
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 via a bank gateway, or the business can sign up with a third party payment service, who actually processed the credit card orders for the business selling the products. Obtaining a full merchant account costs more initially, but has smaller per transaction costs. Using the services of a third party solution costs less initially, but has higher per item costs.
The decision as to whether or not to get a full merchant card processing account or use a third party payment service is only a question of crunching the numbers. Let’s look at two different business types and compare merchant account benefits…
In most cases, established businesses who are already trading locally and simply want to expand online will be more suited to getting a merchant account. Most likely, It’s most likely that they will already have an offline credit card processing account and will expand the remit of that account to also do “MOTO”, which is “Mail Order Telephone Order” processing and simply means that the cardholder isn’t there at the time of purchase.
For micro businesses starting to sell products online, it’s think about testing their marketing using a third-party payment service. The advantage is that there’s very little initial cost so they can test their market cheaply and easily. If the market is profitable, they can eventually look to decrease the per-sale fees by obtaining their own merchant account. If sales are poor, they can at least exit the market without having spent a lot of cash to get a merchant account.