|
Why a
merchant account is not needed
When a trader has newly started an
online business and sells his or her
goods or services all by themselves, one
thing that will be advised to them is to
acquire a merchant account so that
business can be done online. However,
this is not true. In certain
circumstances, merchant accounts are a
necessity. But, for a number of online
businesses, it will just be an added
expense. There are several reasons for
this.
Set up fees – A merchant account cost
a huge amount for it to be set0up. A few
services waive this charge, but a trader
will indirectly be hit by the high
transaction or monthly fees. If checks
need to be accepted online, additional
charges need to be paid for this feature
too.
Monthly fees – After a merchant
account is set up, there is a fee that
is charged known as the monthly fees.
This could include customer service fee,
statement fees, gateway fees, etc. if
checks need to be accepted, a trader
will be charged for that also.
Transaction fees – If a trader
processes the payments via his or her
own account, then a percentage of this
transaction needs to be paid as
additional fees. This fee that is
charged is termed as transaction fees.
Again, accepting eChecks will incur an
additional transaction fee.
Discount fees – A discount fee is a
usually a small percentage (usually
2.5%) of a transaction amount.
More accounting – When a trader
possesses a merchant account, he/she
will have additional accounting
responsibilities. Every transaction that
takes place needs to be added to the
ledger. One can also import and download
the total number off transactions into
the accounting program. However, keeping
a track is still a headache.
Shopping carts and payment gateways –
It is required by a trader to either
rent of purchase additional software so
that the online payments can be
processes, especially a shopping cart
and payment gateway. Keeping in mind the
various charges which come as internet
gateway fee, statement fee, transaction,
discount fee, application fee, fee for
payment gateway license and set-up fee,
it is obvious that merchant accounts
could get pricey a tad bit inconvenient.
There are several 3rd
party credit card and payment processors
existing online. These processors
process check and credit card payments
for a trader and then deposit the funds
into their bank accounts or send the
check across. A minor fee will be
charged for these services. Usually, set
up fees are not charged which only adds
to the convenience. Moreover, a trader
need not worry about shopping carts and
payment gateways!
A merchant who has just started an
online business should know that it is
clearly a waste of money to acquire as
well as maintain a merchant account.
This holds true only when traders are
starting out and have new online
businesses and websites. For new online
business owners, it is not only a hassle
but also a costly affair to open a
merchant account.
|
