by Jeremy Netlon
A Third Party merchant account provider is an independent processor, contracted with by a bank or processor to manage some part of the transaction processing process, that will accept credit card payments on behalf of you or your company. They owns merchant accounts with the additional rights enabling them to accept credit card orders on behalf of other companies. Some third party merchant account providers are: 2Chekcout, Paypal, WorldPay, PaySystems, Clickbank and others.
There are main Advantages of Third Party Merchant Accounts:
- Good on low sales. If your sales are low Third Party merchant accounts are good while starting your online business because you do not need to pay for expensive processing software, monthly fees, statement fees and other fixed fees that you will have to pay even if you don't sell anything. In most cases you pay only a percentage of sales and, in some cases, a per-transaction fee.
- Fast to start. Many Third Party merchant account service providers allow you to accept credit cards online within minutes.
Common Disadvantages of Third Party Merchant Accounts:
- Third party as a payment processor. The one point is that customers need to leave your site to make a purchase of your products and that third party will list their logo on your payment page. The second point is that their name will be included on your customers credit card statements. This may result in more charge backs, lost sales, and fees because making customers more difficult to remember what the charge is for.
- Shared privacy. You are dependent on other party for your businesses and share your sales information with them.
- High cost for high sales. Third Party merchant accounts cost more the more sales you make because the discount rate charged by traditional merchant account providers is lower than the percentage of sales charged by third parties. The higher sales you make, the larger amount you will pay relatively to the traditional merchant account due to it's lower discount rate.
Typical fees of Third Party Merchant Accounts:
- Setup fee.
- Discount rate.
- Transaction fee.
- More about fees...
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