Credit Card Merchant Account Basics
Knowing which credit card merchant account to get can be very confusing. There are thousands and thousands of banks, merchant account providers and third party sales teams that can offer you all kinds of incentives. Billions of dollars are transacted online every year and you want your share. Where do you turn? What do you look for? Read on to find out...
Third party payment processors
The easiest way to accept credit cards online is through a third party payment processor. Companies like Paypal and 2Checkout.com allow you to offer your customers the option of paying by credit card while not having to go through rigorous credit checks or putting down big deposits. Both of these companies include the option of putting a short business name alongside their name of your customers' credit card bill.
Out of the two, Paypal has no up front setup fee while 2Checkout asks for a one-time $49 USD setup fee. Paypal is also cheaper per transaction. 2Checkout works differently than Paypal does when processing orders.
2Checkout is considered to have purchased your product or service and is simply reselling it to your customer at a profit to them. They will handle the initial customer concerns with regards to the transaction but will refer the product or service specific questions back to you.
Paypal on the other hand, simply processes the initial transaction in their name once you've upgraded your account to a Premium or Business account. Your customer doesn't have to register for a Paypal account if you live in certain countries like the US and Canada so it is very simple to use.
Invoicing your customer
Paypal allows invoicing but doesn't allow you to send a money request to someone without requiring your customer to open a Paypal account. On top of that, most new Paypal accounts are subject to a send limit restricting the amount of money you send. Now in most markets that Paypal operates in this send limit is up to $1000 but it is still a limit.
Because 2Checkout is purchasing the product or service from you, they don't have an account creation requirement that they impose on your customer. They have an invoicing function and as long as you have shown to 2Checkout that you process reliable transactions through their system, the process is hassle free for your customers.
Which is right for you?
I use both processors. I tend to process initial transactions through Paypal and regular invoicing through 2Checkout. Either way though, you can't go wrong with either option if you choose to have only one credit card merchant account.