Reasons to Use a Third Party Payment Processor

Processing credit cards for your customers'can have a significant effect on your profit margin.
purchases can easily comprise the bulk of your onlineMost merchant accounts require a minimum sales
store's sales volume. Without having the means tovolume. If that minimum is not met, a monthly charge
charge credit cards, the majority of your customersmay be incurred. If your sales volume is low, you
will simply leave your website. Fortunately, there aremay find that the merchant account is actually a drain
several options for processing payments. Businesson your profits. Using a third party credit card
owners can choose between using their ownprocessor can be a less-costly alternative.
merchant account or using a third party paymentLess Maintenance
processor. There are reasons that support bothProcessing credit cards through a merchant account
cases. In this article, we'll discuss some of therequires that you use a payment gateway, a
reasons you may want to use a third party toshopping cart and an API. While many business
process your credit card transactions.owners hire programmers to handle these details,
Not Eligible For A Merchant Accountdoing so can become expensive. Small business
Even though merchant accounts are easier to secureowners may not have that option. If you don't have
than they were years ago, many business ownersthe budget to hire capable programmers, you may
are still ineligible. There may be a number of reasonshave to do the job yourself. If your own
why this is the case. For example, the major creditprogramming skills aren't sufficient, getting started
card companies (Visa, Mastercard, etc.) only extendwith a merchant account may be difficult. You can
merchant accounts to registered businesses. If youreffectively outsource many of the programming
business is not legally registered, you'll find it difficultchores by using a third party to process credit card
to get a merchant account. Other potential issuestransactions. They'll take care of any coding issues
include being considered a high credit risk (due toand problems when they occur.
credit history or the type of products offered) orPotential Drawbacks
being blacklisted as a "terminated merchant." In eachThere are, of course, drawbacks to using a third
of these cases, using a third party paymentparty payment processor. First, you'll pay higher
processor may be necessary.transaction fees (often up to 15% of the transaction
Small Number Of Productsamount). Second, you'll have to comply with the third
If the number of different products that yourparty's rules (which can often seem inflexible). Third,
business sells online is limited, a merchant accountusing a merchant account looks more professional
may be more trouble than it's worth. The extra feesthan using a third party payment processor. And
for each transaction along with the myriad of otherlastly, you won't be able to build a credit history while
expenses attached to a merchant account mightusing a third party.
make using a third party payment processorIn the end, there isn't a clear cut solution for every
appealing. Plus, the effort of finding a paymentbusiness. Circumstances will dictate which solution is
gateway, setting up a shopping cart and resolvingmost appropriate. When you're searching for a way
any programming issues may require too much effortto process credit card transactions, keep the above
for your limited catalog of products.factors in mind while you weigh your options. That's
Low Sales Volumethe best way to find the solution that meets your
If your business processes a low monthly salesneeds.
volume, the costs of maintaining a merchant account