accept payments online

If you own an online business website or an eCommerce enabled website, chances are your website is generating revenue online. This implies that you are obligated to sell products, services or information online. For transactions to take place online, a website that accepts credit card payments is required.

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 just starting out on the World Wide Web.

The last few years have witnessed a revolution in terms of online money transactions. Third party credit card processing services have joined in and made it easy to accept credit card payments online. Also, with this type of payment gateway, the registration process for both merchants and customers is much easier and more convenient compared to traditional merchant accounts. Just sign up, get approved, and you can start accepting payments online instantly.

Traditional merchant accounts, on the other hand, could be an expensive option, as the merchant must pay a fixed monthly fee, regardless of whether or not they are selling online. With a typical merchant account, the merchant may be required to pay an application fee, setup fee, a discount fee (ranging from 2-3% for each sale), a certain fee for each transaction, a minimum monthly rate, fixed extract, gateway and connection fees.

With third-party credit card processing services, on the other hand, the merchant is required to pay only a small percentage for each sale or transaction, and therefore pays only when a sale is made each time.

Therefore, third-party money transaction services are an ideal choice for websites that experience high sales volumes and thus save you the high transaction fee associated with 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 light of the facts mentioned above, it is also important to note here that the advantages of using the services of a third party start to diminish as the sales of the website start to grow. Since the discount rate traditional merchant account providers charge is less than the percentage of sales charged by third parties, the higher your sales, the more the merchant account’s fixed fees will be offset by your lower discount rate.

Therefore, it is advisable to go for third-party payment services whenever you start a small online business and do not expect huge sales. You should only consider opening a merchant account when your website starts generating more sales online. Perform a mathematical calculation and compare the fee for each transaction method, and then decide which mode to choose.

Lastly, make sure your web host offers the payment modes mentioned above with an ecommerce-enabled hosting package.