Information Junkie

Being able to take credit cards is massively important to any company that wants to successfully sell their own products on the web. At the dawn of online business it was accepted that accepting plastic was not ideal, because it applying a dirt-world solution to the digital world. Lots of businesses trialled virtual currencies for example “beenz”, but none of the e-currencies took off. Here we are, ten years on from the commercial birth of the Internet, still using credit card to make online purchases and therefore accepting credit cards as payment for things online is still vital.

Basically, there are two ways to accept credit cards online. Let’s compare merchant accounts. Businesses can either apply for their own merchant account, which allows the business to process credit cards in their own business name, or the business can go with a third party solution, who processed the credit card charges on behalf of the business selling the products. Obtaining a full merchant account costs more initially, but has smaller per item fees. Using the services of a third party processor costs less upfront, but has higher per item costs.

The decision as to whether or not to go for a full credit card processing account or use a third party processor is just a question of working out which would cost more money. Consider these different business types and compare merchant account benefits…

In most cases, established businesses who are already trading locally and simply want to expand online will most likely be suited to getting a merchant card processing account. Most likely, Usually they will already have an offline merchant account and will tailor that account to also do “MOTO”, which is “Mail Order Telephone Order” processing and simply means that the cardholder isn’t there at the time of purchase.

For one-person businesses starting to sell products online, it is think about testing their marketing using a third party payment service. The advantage is that there’s very little upfront cost which means they can test their business model cheaply and easily. If the market is profitable, they can consider decrease the per-transaction fees by getting their own credit card processing account. If sales are poor, they can at least exit the marketplace without having spent a lot of cash to get their own credit card processing account.