What you need to know about third party merchant accounts

What you need to know about third party merchant accounts

If your business is too new or too small to accept credit card payments directly, look into third party merchant accounts. Making a profit today with a sales-based business is difficult to do if you do not accept credit cards. However, qualifying for merchant accounts -- which allow you to accept credit card payments directly -- can be difficult for new and small businesses to do. Merchant accounts also can be expensive to maintain, making it even more difficult to make a profit on the sales that you do make.

One option that business owners have if they want to accept credit card payments from their customers is to use third party merchant accounts.

What are third party merchant accounts?
Vendors that offer third party merchant accounts are sometimes referred to as "payment gateways." These vendors accept credit cards online for you and charge you a small fee for the service. These fees are usually based on a percentage of the credit card sale. For example, PayPal charges a flat fee of about 3 percent of each sale. This means that if they process a $100 sale for your company, you will incur a $3 fee.

Benefits of third party merchant accounts
There are many benefits to using a third party merchant account, especially if you have a small business or a new business. First, many vendors that offer third party merchant accounts have well established reputations for secure transactions. This will make new customers more comfortable doing business with you. Another benefit offered by vendors of third party merchant accounts is that the fees are inexpensive when compared with the fees associated with opening, maintaining and using a standard merchant account.

Selecting a vendor for payment gateways
There are several factors that you need to take into consideration when selecting a vendor to provide your company with third party merchant accounts. First, you will want to look at the reputation of the credit card processing company. You will also want to examine how they handle disputed charges and credit card fraud. Next, you will want to examine its fee schedule and weigh it against the fee schedule used by standard merchant accounts. You will want to select the third party merchant account vendor that has the reputation and fees that will make your relationship profitable.

Published: June 1,2023