How to Get Affordable Credit Card Processing for Online Businesses

by: frankcollins 0

If you’re starting an online business, or already an entrepreneur, you should know how important it is to accept credit cards from your customers.  Giving internet users a way to make a purchase immediately is how business owners benefit from impulse shoppers – people who see advertisements or read about your products or services online and want to buy them immediately.  If you only accept checks through the mail, the additional time it takes to place the order will deter many from buying. Accepting credit cards online also takes your small business global – and you can sell to international customers as the credit card processing system can handle currency differences.

Online shoppers expect to pay for their services or items online instantly with credit or debit cards, but as the business owner of an online venture – you may be concerned that the costs of credit card processing will eat most of your profits.

As an online business owner, you have two methods for accepting credit cards.  You can either set up a merchant account with a bank, or use a third party merchant.

Get Your Own Merchant Account

Requirements for setting up a merchant account through a bank vary depending on the country you live in and the individual bank in which you apply.  Opening a merchant account generally requires a minimum credit score, so not everyone will qualify.

For most merchant accounts, the initial costs are much higher than you would pay to get set up with a third-party merchant provider.  There are generally “set up” fees involved with opening a merchant account, as well as fees-per-transactions.  The ongoing transaction fees for a merchant account are much lower than the fees paid to a third party provider, however.  Transaction fees are paid to the bank where you opened your merchant account or to the third party merchant processing cards for you, and are generally charged per card processed.

Third Party Merchant Companies

Third party merchants are companies that accept credit card payments from your customers on your behalf, and then charge you a fee for the service.  They are also known as payment gateways.

Many third party merchants can be set up without an initial fee, making them an extremely affordable option for the new or small business owner.  Some may charge a monthly fee, but the majority of payment gateway companies simply take a percentage of each credit card processed on your behalf.

Almost everyone can get approved for and use third party merchant accounts, which means if you don’t meet the requirements for a merchant account you still have options for accepting credit cards from your customers.  They are also useful for new business owners who aren’t exactly sure if their product or service will sell enough to make it a profitable business venture – as you can set up a third party merchant account with limited expense to test the business idea and reduce your financial risks if it doesn’t work out.

Examples of some of the more commonly used third party merchant providers include Paypal, Propay and Google Checkout but you can always do some research online and find tens of other processors.

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