Though the best way to do so is by creating a merchant account, there are certain methods that will let you accept credit card payments without the same.
‘Third-party Merchant Services’ are credit card processing companies that process credit card payments on your behalf and deposit the money in your account. This option is best suited for:
- Those who do not want to handle credit card transactions on their own
- Those who do not own a secure server to store customer credit card data
- Businesses with less than $1000 worth of transactions per month
- Those who may have difficulty in obtaining their own merchant account (bad credit history, unauthorized business dealings, ownership issues, etc.)
- Those who first want to test if accepting credit cards will boost their sales, and only then obtain their own dedicated merchant account.
Though third-party processors are also referred to as ‘free’ merchant accounts, they are not really free. While the set-up costs for these accounts are very low, they earn their revenue by charging a small percentage from each of your completed transactions.
These are some of the most popular third-party merchant service providers:
- PayPal – Paypal allows to you sell electronic goods, services and other products by processing all your credit card transactions on its server. Though setting up an account is free, it charges a small percentage on all your transactions.
- ProPay – ProPay supports all kinds of businesses that accept credit cards and require instant credit card processing services. You need to pay a one-time activations charge, plus 3.5% of total sales and $0.35 per transaction.
- 2Checkout.com – This is another third-party merchant service that supports all types of businesses that accept credit cards. An account can be set up in as little as 3 minutes.
- CC Now – It provides complete solutions for online auctions and other kinds of businesses.
- Kagi – This is best suited for ecommerce sites and other online businesses. It handles everything, from the creation of websites to processing online payments.
- Clickbank – It caters to businesses that deliver unique products or services only over the internet.
- Credit Card Billing – CCB is for companies that sell website content or services, and charges a small percentage of the transactions that are processed through their server.
While opting for a third-party processor is the best option for some who accept credit cards for business, it has its disadvantages too. Let’s have a look at the pros and cons of using third party merchant accounts:
Pros:
- Low upfront costs
- No customer service charges or gateway fees
- Minimal (sometimes zero) Setup Fee
- Capable of handling international sales
- No credit checks required
- Starts accepting online payments within minutes
Cons:
- Charges a percentage from all completed transactions
- Charges a small fee per sale
- Retains 5-10% of your total earnings as a safeguard against charge-backs
- More expensive than dedicated merchant accounts
- Support is based on the kind of products you sell or services you offer
Do your homework properly before selecting a third-party merchant service. While it has its cons, using a third-party processor is still the easiest, quickest and most inexpensive solution for accepting credit card payments without owning a merchant account.