Comparing Merchant Accounts - A Simple Guide To Compare Merchant Card Processing Accounts

Being able to take credit cards is critical to any website wanting to actively sell products and services on the web. Back in the early days of the Internet it was understood that accepting plastic was a bad idea, because it was trying to apply an offline technology to the Internet. Lots of businesses trialled digital currencies for example "beenz", but the web-based currencies didn't flourish. And so, roughly a decade on from the people starting to sell on the web, still using credit card to make online purchases and accepting credit cards when offering things online is still vital.

Basically, there are two ways to accept credit cards online. Let's compare merchant accounts. A business can either apply for their own merchant account, which allows them to process credit cards in their own business name, or the business can go with a third party solution, who actually processed the credit card orders on behalf of the company. Obtaining a full merchant account costs more initially, but has smaller per transaction charges. Using a third party payment service costs less initially, but has higher per transaction fees.

Deciding whether or not to get a full merchant account or use a third party solution is simply a question of running the numbers. Let's look at two different business types and compare merchant account benefits...

In most cases, merchants who are actively trading offline and want to start selling on the Internet will most likely be more suited to getting a merchant account. Most likely, It's most likely that they will already have a real world merchant account and will expand the remit of that account to also do "MOTO", which is "Mail Order Telephone Order" processing and simply means that the credit card holder is not there at the time of purchase.

For small businesses starting starting to sell on the Internet, it is important that they consider testing their sales using a third-party solution. The advantage is that there's next to no upfront cost which means they can test their business model cheaply and easily. If the market is profitable, they can consider decrease the per-sale fees by applying for their own merchant card processing account. If the market isn't profitable, they can quickly leave the marketplace without having paid significant upfront costs to get their own merchant card processing account.