If you are a business owner, hopefully you are already aware how important it is for you to accept credit cards. (If not, check out our blog for 15 great reasons why.) In looking at your options, you have probably come across some 3rd party merchant services and may be wondering what the difference is between these companies and a traditional merchant account.
3rd party merchant services essentially allow multiple people (merchants such as yourself) to process transactions through that company’s own merchant account rather than each merchant using their own individual one. While this might seem simple enough at first glance, it actually causes some unnecessary difficulties in the process. A prime example is the fact that — because all of the funds are initially going into the 3rd party merchant service’s bank account — it often takes much, much longer than it should to deposit the funds into the merchant’s bank account. Many of these providers only give merchants their funds weekly, biweekly, or even monthly! Whereas with a traditional merchant account, you should be receiving deposits within 1-2 business days after you batch out.
Many of these 3rd party merchant services draw people in with promises of no monthly or set up fees. What people often don’t realize, though, is that by using these services they are likely being charged much higher discount rates than they would normally have to pay through a traditional merchant account. This means you might think you are saving money because there is nothing you are guaranteed to have to pay monthly, but you actually end up paying more for every single transaction. If you process a good amount, these high per-transaction rates easily add up to more than you would need to pay for a monthly fee anyway. Also, eCom Merchant Solutions almost never requires a set up fee, unless there are extenuating circumstances. There are actually multiple fees that 3rd party merchant services will boast that they do not charge, such as early termination fees, that eCMS does not require either.
Another big con to having a 3rd party merchant account is that it usually causes your website’s checkout process to be less smooth and cohesive, because generally you have to link to the service provider’s payment page rather than having your own. Making your customer leave your website to pay can cause many issues: it makes your business look less professional, the slight break in the process can cause them to reconsider the purchase, or the customer might feel that the payment process is not secure or trustworthy.
Having a traditional merchant account gives you much more control over your payment process and account details. You can streamline the checkout page so that the customer never even has to leave your website, not to mention receiving the funds within a couple business days! Also, as we mentioned above, usually the per-transaction fees will be lower than those offered by 3rd party merchant services, which ends up saving you money in the long run.
As we near 4th of July, our Independence Day, it is a perfect time to take control of your very own merchant account and be independent in choosing how the process will work for your business. We are also now offering American Express OptBlue for all of our merchants, which allows you to set yourself free of AmEx’s customarily high rates!