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A QUICK METHOD FOR THE COMPARISON OF MERCHANT ACCOUNTS

 Merchant Account is required to process credit card payments from your customers. Few years ago this was a luxury but in today’s business if your company does not accept credit cards then you must either offer something which is highly exclusive or face the brunt of the competition.

Accepting payments through credit cards on the internet is even more crucial to any company if it has to sell its products or services, successfully. During the initial days of the net, plastic cards were not accepted as it was like forcing the offline system to be accepted in an online system. The companies launched the “Flooz” and “Beenz” which died out very soon. But, the internet world of today accepts not only credit cards but also debit cards.

Basically, 2 different methods exist to accept payments through credit cards on the internet. Let us now compare the merchant accounts. The business can apply for a merchant account which will be totally owned by them or it can apply for a “Third Party Credit Card” processor, who actually does the processing of the credit card for the business that is selling the goods. Getting the first type will cost you more as it attracts more upfront costs but fewer charges on individual items. If you go for the second option then, your upfront costs will be less but your per transaction cost will be much higher.

Deciding which option is a better one for your business is a question of getting your math right. Let’s begin by looking 2 types of business and compare the benefits of the merchant accounts.

If the merchant has an offline business that is doing well and he simply wants an online account to expand his business then most probably he will already have a merchant account and only has to expand its capability to do “MOTO”.

For small and start up businesses having an online merchant account of their own is not advisable. It is better for them to start with the “Third Party Payment Service”. The benefit here is the fact that the small business does not have to pay much in the beginning which allows them to test their ability to sell easily and quickly. If they make good profits, then they can think about decreasing the other costs such as per transaction costs and the discount rates by applying for a processing account of their own. However, if the sales are meagre and the business is doing horribly then, they can easily leave the business without loosing much of their capital on getting a merchant account. This will decrease the risk of obtaining a merchant account and thereby, most of the small businesses will get this account.

But, once your business starts to grow and your credit card transactions increase then you should quickly get a processing account of your own so that your effective rate will go down, thereby increasing the profitability of your business.

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.