If you own an online business website or an e-commerce enabled website, chances are that your website is generating online revenue. This implies that you are required to sell products, services or information online. In order for the transactions to take place online, a website is required to accept credit card payments.
Accepting Payments Online
If you own an online business website or an e-commerce enabled website, chances are that your website is generating online revenue. This implies that you are required to sell products, services or information online. In order for the transactions to take place online, a website is required to accept credit card payments.
While opening a merchant account is the traditional method of achieving this goal, it turns out to be an expensive proposition especially for small businesses that are just starting out on the World Wide Web.
The last few years have witnessed a revolution in terms of online monetary transactions. Third party credit card processing services have joined in and have facilitated the process of accepting credit card payments online. Furthermore, with this type of payment gateway, the sign-up process for both merchants and customers is far easier and convenient as compared to the traditional merchant accounts. Just sign-up, get approved and you can start accepting online payments instantly.
The traditional merchant accounts on the other hand could an expensive option as the merchant is required to pay a fixed monthly fee irrespective of the fact whether they are selling online or not. With a typical merchant account, the merchant may be required to pay the application fee, set-up fee, a discount rate (ranging between 2% to 3% for every sale), a certain fee for every transaction, a monthly minimum fee, the statement, gateway and connection fixed fees.
With the third party credit card processing services on the other hand, the merchant is required to pay just a small percentage for every sale or transaction and therefore he pays only when a sale takes place each time.
So the third party money transaction services are an ideal option for websites that experience high sales volumes and thereby save you the otherwise high transaction fee associated with the regular merchant accounts. So for a third party service that, like PayPal, charges you 2.9% of sales plus $0.30 per transaction, it would only cost you $10.25.
Now in the light of the above-mentioned facts, it is also important to note here that the advantages of utilizing the services of a third-party begin to decline as the website sales start to grow. Since the discount rate charged by traditional merchant account providers is lower than the percentage of sales charged by third parties, the higher your sales the more the fixed fees of the merchant account will be offset by its lower discount rate.
So it is advisable to opt for the third party payment services if and when you start a small business online and are not expecting huge sales. You should only consider opening a merchant account when your website starts making more online sales. Perform a mathematical calculation and compare the fee for each transaction method and then decide which mode to choose.
Lastly, ensure that your web hosting provider is offering the above mentioned payment modes with an e-commerce enabled hosting package.
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