Alternatives to Merchant Accounts

There are other ways to accept credit cards that are just as safe and effective as merchant accounts. CCBill, CCNow, ClickBank, Digibuy, iBill, PayPal, ProPay, and RegNow are the major means of transacting credit cards without merchant accounts. These are called third party merchant account services. A processing fee higher than the discount rate charged by regular merchant account providers is applied.

Third party merchant accounts provide a secured website to process your customers' orders, and receive payments. Many third party merchant accounts comes with features such as a shopping cart, around the clock customer service, and the capability to accept other forms of online payment.

Small businesses can prosper using third party merchant accounts. These accounts are ideal for start-up businesses that haven't established credit and profit less than $1,000 per month.

Just like with merchant accounts, third party merchants accounts has fees. The application fee is usually free, but there are other fees to establish and maintain the account. There is the one time set up fee, monthly statement fee, discount rate, transaction fee, weekly processing limit, monthly processing limit, and single transaction fee limit.

Let's take a look at PayPal, the most popular third party merchant account. It is an account-based system, thus allowing people to send payments online to anyone using their credit card or bank account. The free shopping cart feature allows you to make your website into a full-fledge e-commerce store. There are no setup or monthly fees, but there are processing fees of 2.2% + .30 for credit cards and 1.6% + .30 for non-credit cards. Payments under $15 are only charged .30.

To compare, ClickBank allows you to also accept checks for a one time set up fee. ClickBank fees are different than PayPal's. ClickBank deducts a transaction fee of 10% plus .40 for each sale you make. A check is then sent to you twice every month. The set up fee is $49.95 and the processing fees are 7.5% plus $1 per sale.

Be sure to compare all the third party merchant accounts to make sure you choose the one that's right for your business. You don't want PayPal if you want to accept checks. ClickBank would be better for you, but the charges might be higher. Do your homework and be informed. Make the right choice and your business can thrive using third party merchant accounts.

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