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. |