carts, merchant programs, the ability for your business to accept credit
cards on the Web as a method of payment, are confusing areas for most new
Why is that? Perhaps because not too many educational institutions offer
courses in it, you don't know how bad one service can be until you're stuck
with one and then it's too late, and probably the most compelling reason why
they are so confusing is because not too many web sites offer true
unbiased information on them. They want you to be confused. If you ask
too many questions then the weaknesses of their programs are exposed.
As merchant account specialists we know we must offer more than one program
and from more than one sponsoring bank. Why? Honestly, a "one size fits all" merchant program
still does not exist!
Fortunately you've stumbled across our web site which is one of the most
informative sites on eCommerce, payment services, merchant programs, and
eBusiness related online fraud.
A regular Merchant Account is an account set up between a retail company and
a merchant bank which allows the retailer to accept a credit card order from a
customer, and in turn receive the monies through the bank.
If you wish to accept credit cards online in your own company name you will
need your own Internet merchant account.
Obtaining an Internet merchant account to accept credit cards on the Internet
is more difficult than obtaining a 'regular' merchant account because the card
is not present nor is a signature obtained.
This site compares the services of credit card processing companies that will
perform the credit card billing under their company name using their merchant
account (for a percentage of the total sale amount) and forward the monies to
your bank account or send you a check.
A third party credit card processor' is a company that can accept credit
card orders on behalf of you or your company. This makes obtaining a merchant
account for your company unnecessary, although it could be worthwhile if you
sell enough goods to warrant the expense involved.
Third Party credit card processor companies own merchant accounts with the
additional rights to use that merchant account to accept credit card orders on
behalf of other companies.
Generally it is illegal to obtain a merchant account for your company and
then sell another companies goods through your account. As I mentioned,
additional rights have to be bought to enable a company to accept credit card
orders for another company or individual.
Interestingly, CCBill will sell the franchise for such a merchant account for
$60,000, so this is not a cheap venture!
Let's look at the advantages and disadvantages of using an "Online Credit
Card Processing Service"...
The advantages are that you simply link your products to the validation
service who then accepts credit card payment on your behalf. They check the
card, process the card and send you a monthly payment for the amount you are
owed. Bingo! Your own e-commerce solution!
The main disadvantage is that you will pay for the service. Costs vary, but
usually the credit card processor has to make a profit and so charges you a few
extra percentage points on the transaction in comparison to having your own
online merchant account.
Perhaps the best way to look at using a processing service is to see them as
a stepping stone for your business. Initially you will pay more *per order* but
with no setup fees. Then, if your business is a success, you will pay a large
setup fee for your own online merchant account, but then pay less per order.