Third Party Merchant Accounts

There are a few ways to collect credit card payments online for your business. First and foremost, you can simply set up a merchant account on your own, or through an independent sales organization (ISO), but you can also choose to go with another option, which is a third-party merchant account. Unfortunately, there are so many possible options that it can all seem somewhat overwhelming, making it difficult to make a decision on which solution is best for your business.

Perhaps the most flexible option, as well as the one with the most variety of benefits, is to set up your own merchant account. This is particularly beneficial for customers because they are not required to sign up for an account with a third party in order to purchase your products or services, and depending on the type of merchant account that you choose to go with, you can accept credit card transactions through a variety of methods ranging from over the phone, via the Internet, or wirelessly. In addition, a merchant account usually comes with a variety of benefits to protect both your business and consumers, with most ISO companies providing 24/7 customer service in conjunction with a risk department that protects you, the bank, and the customer from fraud.

Third-party merchant accounts are extremely popular in today’s business world, with PayPal being one of the largest and most recognized example of a third-party merchant. Basically they store credit card numbers that your clients use. The downside of third-party merchant accounts is that they usually charge a far larger percentage or higher fee than the standard accounts operated through ISOs. However, PayPal is extremely popular because of the ease of use. Funds are directly deposited into your bank account, allowing you to spend them using a debit card or request a check, and PayPal now offers a debit card specifically linked to your third-party merchant account, which means no coding knowledge is necessary nor is an additional bank account. PayPal generally charges a percentage per transaction, which is considered par for the course with third-party merchant accounts. The downside to these accounts is that despite their ease of use companies like PayPal do not offer accounts in all areas of the world, at least not yet. What this means is that if you are offering some form of product or service in the online market you could be limiting your business by operating with a third-party merchant account.

However, many of the most successful businesses operate using a combination of options, with a large percentage of sales generated by third-party merchant accounts in conjunction with traditional merchant accounts set up through an ISO. Just bear in mind that merchant accounts through an ISO project a much more professional image, such as a business name and phone number that shows up on your customers billing statement, and the ISO will always provide you with seamless integration into your website, with a variety of features that third-party merchants do not offer.

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