Comparing Merchant Accounts - A Quick Guide To Compare Merchant Accounts

Accepting credit cards online is critical to any website that wants to actively sell products and services on the Internet. Back in the early days of the Internet it was understood that relying on credit cards was not a good idea, because it was trying to apply an offline system to the Web. Startup companies tried to offer digital currencies eg "flooz", but the web-based currencies didn't flourish. And so, approximately 10 years on from the launch of businesses online, still using credit card to make online purchases and so accepting credit cards when selling 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 the business to process credit cards via a bank gateway, or the business can elect to use the services of a third party solution, who actually processed the credit card orders for the business selling the products. Obtaining a full merchant account costs more initially, but has lower per item costs. Using a third party service provider costs less initially, but has more expensive per sale fees.

The decision as to whether or not to go for a full credit card processing account or use a third party processor is simply a question of crunching the numbers. Let's look at two different business types and compare merchant account benefits...

In most cases, merchants who are already trading locally and want to expand online will be suited to getting a merchant account. Most likely, Usually they will already have a real world credit card processing account and will tailor that account to also do "MOTO", which is "Mail Order Telephone Order" credit card orders and simply means that the credit card holder isn't there at the time of purchase.

For one-person businesses starting starting to sell on the Internet, it's important that they consider testing their sales using a third-party solution. The advantage to the new business is that there's hardly any initial cost which means they can test their market quickly and easily. If sales boom, they can consider decrease the per-item fees by applying for their own credit card processing account. If the market isn't profitable, they can at least leave the market without having spent a lot of cash to get a merchant account.