The Most Effective Methods for Choosing a Credit Card Processing Company
One of the most critical decisions when starting an online business is determining which credit card processor to use and how your customers’ payments will be processed. There are two primary approaches to take: You can either use a true merchant account and process the transactions yourself, or you can use a third-party processor. Your choice of credit card processor may have an effect on the operation of your entire Website.
Probably the simplest method of selecting a credit card processor is to first list your requirements and then compare the various available plans. Will cost be the primary consideration, or will other factors be considered? Contrast a true merchant account with third-party credit card processors.
What distinguishes a legitimate merchant account from a third-party credit card processor?
True Merchant Payment Processors
With a genuine merchant account, you are the merchant and can apply directly with a bank. However, this is frequently accomplished through the use of a sales agent. The account will be exclusively for your business. You, as the merchant, will have complete control over the account and will be solely responsible for its operation in all respects. You will need to provide your own gateway for the account, as this will not be included.
Nota bene: As an enticement, some companies that offer credit card processor plans will offer a bundle that includes a gateway. You are free to use any gateway you wish, as they are completely independent entities.
Essentially, a credit card processor’s merchant account is a direct account with MasterCard, Discover Card, or American Express. If you decide to accept payments from their members, you must follow their rules strictly.
Processors of Credit Cards on a Third-Party Basis
A third-party credit card processor maintains its own merchant account, which enables individuals and businesses to accept credit card payments. A third-party credit card processing company wields complete authority because they establish the rules that you must follow as a condition of sharing their merchant account.
When should you consider utilizing the services of a third-party credit card processor?
-If your business is not registered -If you have been blacklisted -If you or your business is deemed high risk -If you have bad credit or none at all
-If you only process a few transactions per day
If you are not a programmer and are unable to execute a complex API.
Additional considerations for third-party credit card processing include the following:
1. They will not charge higher rates to high-risk merchants.
2. They make no credit checks.
3. They cannot be used in conjunction with a dedicated gateway.
4. Their name appears on the credit card statements of your customers.
5. It may take up to a month for deposited funds to be received.
6. Rates for third-party credit card processing are not negotiable.
The majority of reputable online merchants are aware that they will need to accept credit cards online and will require a merchant account and a payment gateway. There are compelling reasons to believe this:
-If a high volume of transactions needs to be processed, a true merchant account’s discount rate will be significantly higher than that of a third-party credit processing company.
-The merchant retains complete control of the account. Customers can deal directly with the merchant, and the merchant’s name appears on the customer’s credit card statement.
-Transparent checkout – Enables customers to complete their transactions directly on the Merchant’s website, rather than being redirected to a third-party site.
-Provides a more professional image – A true merchant account provides a more seamless experience that customers expect.
When you apply for a true merchant account, you will be subjected to a thorough credit check and will be prohibited from using the account for personal purposes. Rates are always negotiable, but high-risk products will command significantly higher premiums. You may process credit cards through a separate gateway of your choice, and your business name will always appear on the customer’s statement. Funds will be deposited within 1-3 days, and you may be obligated to sign a contract that lasts several years.
The majority of online businesses that are just getting started have low profit margins and limited budgets. For the majority of them, cost will be the deciding factor when selecting a credit card processing company. Each business’s needs are unique, as are the credit card processing offers they receive. Comparing apples to oranges is akin to comparing apples to oranges and can be quite challenging. One strategy for conducting the comparison is to first collect data on the fees associated with both third-party and true merchant accounts.
-Setup fee: the cost of establishing the account -Discount rate: the percentage of sales that the processor retains -Transaction fee: the flat fee the processor charges for each transaction -Monthly fee: the monthly fee associated with maintaining the account -Setup fee: the cost of establishing a gateway
-Monthly gateway fee: the fee charged by the gateway provider for the use of their payment gateway services on a monthly basis.
Following that, list the number of transactions you anticipate making each month and the average amount spent by a customer on your Website. Credit card processing can be compared between a variety of third-party processors and true merchant providers. For instance, while Papal and Verisign are both well-known companies, they are diametrically opposed.
While both of these methods are capable of online credit card processing, their implementations are quite different. Each has distinct advantages. Due to the unique nature of each business, you must consider all aspects of accepting credit cards online, not just the costs. Occasionally, paying a few additional fees can help improve your customers’ experience and the overall look of your Website. Allow sufficient time to investigate all of your options in order to find the most cost-effective credit card processing company that meets your online business’s needs.