Merchant Account Comparison - A Quick Way To Compare Merchant Accounts
October 3, 2008
Being able to take credit cards is critical to any company wanting to actively sell their own products on the Internet. Back in the early days of the Internet it was thought that using credit cards for Internet purchases was not ideal, because it applying an offline system to the Internet. Various companies trialled virtual currencies for example “flooz”, but the web-based currencies didn’t flourish. And so, approximately 10 years on from the commercial birth of the Internet, still getting our plastic out of our wallets to buy on the web and accepting credit cards when trying to sell things online is still vital.
Basically, there are two ways to accept credit cards online. Let’s compare merchant accounts. A business can either sign up for a merchant account, which allows them to process credit cards in their own business name, or they can elect to use the services of a third party payment service, who actually processed the credit card orders for the company. Getting a merchant account has higher upfront costs, but has lower per transaction costs. Using a third party processor costs less initially, but has higher per sale costs.
Deciding whether or not to get a full merchant account or use a third party payment service is only a question of doing the math. Consider these 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 more suited to obtaining a credit card processing account. Most likely, It’s most likely that they will already have an offline merchant account and will tailor that account to also do “MOTO”, which is “Mail Order Telephone Order” processing and only means that the credit card holder isn’t present at the point of sale.
For micro businesses starting to sell products online, it’s think about testing their sales using a third-party payment service. The advantage to the new business is that there’s hardly any initial cost so they can test their market cheaply and easily. If sales boom, they can consider reducing the per-transaction fees by obtaining their own credit card processing account. If sales are poor, they can quickly exit the marketplace without having paid significant upfront costs to get their own merchant card processing account.