PROS AND CONS OF THIRD PARTY CREDIT CARD PROCESSING

PROS AND CONS OF THIRD PARTY CREDIT CARD PROCESSING

Why exactly should a business depend on a third party for credit card
processing services?
These days nothing happened without a credit card and it is near
impossible to find an individual who does not carry a credit card in
his or her wallet. For this very reason for a business to carry on in
today world it is necessary to own a credit card processing service.
You can be sure that if you inform a customer that you cannot take
payments through credit cards or that your business does not accept
credit cards the customer will just take your business to the nest
shop which gives them the flexibility of using their credit cards.

Why is it difficult to get a merchant account?

Generally credit card processing services will require you to own a
merchant account of your own. This is much easier said than done
because owing to the credit crisis man merchants had to just shut down
their businesses leading to a lot of unpaid debts. As a result banks
are doubly careful about whom they give their merchant accounts to. So
in order to open a merchant account you may need to have a fairly long
and impeccable sales track record. This makes it near impossible for
businesses that have just begun their gestation to own a merchant
account and as a result a credit card processing service.
To add to the list of troubles is the cash that you would need to
shell out for every transaction that involves a credit card in
addition to the millions that you would need to invest in order to put
in place such a credit card processing service. This makes it
infinitely better for small as well as new businesses to rely on third
party credit card processing services.

What does the third party credit card processing service provider do?

A third party credit card processing service provider will typically
open a merchant account for you and operate your credit card
transactions through that merchant account on your behalf. In exchange
you may need to provide a percentage of the money that involves a
credit card transaction as their charges. This would vary from one
third party credit card processing service to another.

Advantages of going in for a third party credit card processing service:

The biggest advantage that any business owner has by going in for a
third party credit card processing service is that he gets to accept
credit card payments without having to go through the tedious process
of getting himself a merchant account following which he will need to
also invest in a credit card processing service. The merchant account
in itself can be a painful task if the business is a relatively new
one since most banks would be unwilling to trust a business owner who
has not yet been able to make a mark let alone get significant
business.
Getting a merchant account is no simple task. It is imperative that
you will need to furnish proof of your business credibility in
addition to also furnishing a rock solid sales track record that is
free of any black marks. Moreover it will also take some amount of
practice to actually getting to operate your own merchant account and
your own credit processing service. So it is always advisable to go in
for a third party credit card processing service till the time your
business gets to a level when you can both afford and manage a credit
card processing service of your own.

What are the disadvantages of a third party credit card processing service?

The biggest and the most prominent disadvantage is the cost aspect.
For one thing you would need to pay a percentage of whatever amount
you transact as charges for using their services. There is no hard and
fast rule which stipulates what fees a third party credit card
processing service can take from you and so most providers don=92t
follow a definite methodology when it comes to taking money from you.
This would make it a difficult task to key in on the provider who
gives you the best deal in the market and there will be very little
information available that you can rely on.
The other accusation leveled against a third party credit card
processing service is that their payment schedules are not to be
trusted and may turn put to be a long and tedious wait. This may be
true for some of the providers but there are many providers in the
markets who are precise and prompt in making their payments.
Yet another disadvantage that is difficult to ignore is that the
merchant name does not appear in the credit card receipt making it
difficult for the customers. But this scenario is changing these days
as more and more providers are using the latest technology to put in
the name of the merchant in the customers copy of the receipt.

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Posted by Miles on Jan 12 2011. Filed under 0% Apr credit Cards • Credit Card . You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.