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MERCHANT ACCOUNT FOR SMALL BUSINESSES
There is no ecommerce merchant account
that is designed especially for small
businesses. Small businesses have to
apply for the normal merchant accounts
which the providers give with higher
fees for small businesses. The ecommerce
merchant account will attract high fees
and stricter “terms and conditions” if
you are the owner of a small business.
The reason for this is your small
business will not have a high turnover
to bring in more profits for the
provider. Therefore, the processing
company will also not have more profits.
Therefore, the fees and rates for
merchant accounts for small businesses
are higher.
The higher rates and fees are as
follows:
-
Higher Discount Rate: These merchant
accounts attract 6 – 12%, for each
transaction.
-
Higher monthly fees, higher
membership fee and higher setup fee.
-
And many others.
Then, the question arises: Why do small
ecommerce businesses need this kind of
an account? Processing of credit cards
for online business is necessary because
the online business cannot survive with
out it. All the local banks and the
regular account providers have a minimum
monthly volume. It means that any
registered merchant has to process a
minimum amount of money to stay
registered. If the minimum amount is not
reached then your merchant account will
be terminated or you will have to pay a
fine. If the merchant account is
terminated then the small business will
get a red mark on their credit reports
which they cannot afford at this stage.
The word small does not mean that the
number or services or products available
on your site is less and it also does
not mean that the number of visitors is
less. It only means that your processing
volumes are very low. Ecommerce merchant
accounts designed for small businesses
have no policy on minimum volumes. This
is the only advantage that you get with
the merchant account.
You can also apply for the 3rd
party merchant account. Such accounts
will have no minimum processing volumes
or they will have convenient processing
policies. You will also not have to pay
any membership fees. Due to these
advantages, the 3rd Party
Merchant accounts are available at much
higher rates that the regular accounts.
Being a new ecommerce merchant you will
have lots of expenses to build a good
reputation, thereby allocating only a
minor portion of your financial
resources to credit card processing.
Moreover, your online business will go
no where without credit card processing.
Therefore, for small businesses the best
choice is either to obtain the “merchant
account for small businesses” or to
obtain a 3rd Party Merchant
Account.
Which is a better choice? The answer
depends entirely on you and your
business requirements. You have to spend
some time to analyze your ecommerce
business needs and decide which one will
best suit your business. Find out the
advantages and disadvantages of each of
these accounts in specific situations.
Don’t take this decision in a hurry and
repent it later. |
