Merchant Account Comparison – A Quick Way To Compare Merchant Accounts
- Posted in Small Business
- Comments 0
Accepting credit cards online is critical to any company that wants to actively sell products and services on the web. At the dawn of online business it was thought that relying on credit cards was a bad idea, because it was trying to apply a real world solution to the Internet. Various companies tried to offer digital currencies for example “flooz”, but none of the e-currencies took off. Therefore, ten years on from the commercial birth of the Internet, still getting our plastic out of our wallets to buy on the web and so accepting credit cards as payment for products online is still as important as ever.
There are basically two ways to accept credit cards online. Let’s compare merchant accounts. A business can either sign up for a merchant account, which allows the business to process credit cards via a bank gateway, or the business can sign up with a third party service provider, who actually processed the credit card orders on behalf of the company. Obtaining a full merchant account has higher upfront costs, but has lower per item fees. Using a third party payment service costs less initially, but has more expensive per transaction charges.
Deciding whether or not to get a full merchant card processing account or use a third party payment service is simply 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 actively trading offline and simply want to expand online will be suited to obtaining a merchant account. Most likely, It’s most likely that they will already have an offline merchant card processing account and will expand the remit of that account to also do “MOTO”, which is “Mail Order Telephone Order” credit card orders and simply means that the cardholder isn’t present at the point of sale.
For small businesses starting starting to sell on the Internet, it’s strongly suggested that they begin by testing their sales using a third party solution. The advantage is that there’s hardly any initial cost which means they can test their market quickly and easily. If sales boom, they can think about reducing the per-item costs by getting their own merchant account. If the market isn’t profitable, they can at least exit the market without having spent a lot of cash to get a merchant account.
Related posts:
