Accepting Credit Cards
Accepting credit card payments is very important for your business. In fact,
it's almost a necessity in today's marketplace. You will greatly increase
your chances of a sale by giving the customer the option of charging purchases.
Methods of Accepting Credit Card Payments
There are actually two ways in which you can accept credit cards:
1. Using Your Own Merchant Account:
To do this, you will need a bank or Independent Sales Organization (ISO)
that will allow you to open a merchant account. Requirements for this
will vary from banks to banks, and you should check with your local banks
or merchant account providers.
2. Through a Third Party Merchant:
There are growing number of companies around willing to accept credit
card payments on your behalf in exchange for various fees and percentages.
They take care of different aspects of the transaction process such as
authorization, billing, reporting, and settlement. This makes third-party
processing services perfect for small and new businesses just getting
started that lack established credit and generate low volume sales.
Which Method Should You Use?
The initial costs of opening your own merchant account is usually higher
than when you use a third party merchant. Indeed, some third party merchant
services have no setup fee at all.
However, the transaction fee is much higher when you use a third party
as compared to when using your own merchant account.
A third party merchant service is usually convenient to use when you don't
know if you can actually make much out of your product or service. This
is usually a good way to start if you run a low-volume business. It is
also convenient in that the merchant takes care of everything for you.
You just get a check at the end of each payment period (if you earned
enough) and concentrate on your products, services and customers.
Having your own merchant account accords your business with a certain
amount of professionalism. And, as mentioned earlier, your transaction
costs are usually much lower. However you have to be careful to minimize
your credit card risks since you'll be processing the credit card payments
yourself.
Your Own Merchant Account
Advantages:
- Lower credit card percentage fee.
- Fees refundable on returns.
- Less expensive on higher volume sites.
- Much shorter wait time for money.
- Ability to use own ordering system.
- Able to sell any kind of product/services.
- More control over sales, refunds & charge-backs.
- Don't have to go through another company.
Disadvantages:
- Large Startup Fee.
- A few monthly fees involved. (Depends on the provider)
- More expensive on very low volume sites.
Third Party Merchant Services
Advantages:
- Less startup costs.
- They handle customer support.
- Fees refundable on returns.
- Less expensive on very low volume sites.
Disadvantages:
- Higher percentage fee.
- Less control over sales, refunds and charge backs.
- Much longer wait to access your money.
- Limited to only tangible items.
- Complexity of going through another company.
- Increased chance of being down by using another company's service.
- Must use their shopping cart system.
Next Step
To get your own merchant account, go to Merchant
Account Providers page.
To use a provider's account, go to Third
Party Merchant Services page.
|
 |
|
