Accepting Credit Card Payment on Your Website

Methods to accept credit card payment


If you want to accept credit card payment online, you have only two options: you can either use your own merchant account or resort to third party credit card processors (or a payment gateway), also known as third party merchant accounts.

Using your own merchant account


Most companies using SaaS delivery models prefer to get their own merchant account. This method of accepting credit card payment works great whether the company’s domain of activity is CRM, accounting, invoicing, CM, or HR management. However, the advantages of using your own merchant account aren’t limited only to SaaS businesses. Virtually any business that makes profit from more than advertising will need to be able to accept online payment for their products and services and the merchant account is one of the most practical ways to do so.

You could, of course, resort to third parties to receive credit card payment, but this affects your credibility with some of your potential customers, who used to pay through the business’s own merchant accounts. For this reason, using your own merchant account managed by a financial institution and using a payment gateway is the best way to handle payment from credit cards.

Since there are so many business competitors from all fields on the market, you’d believe that the process of setting up your own merchant account is easy and fast. Regrettably, that’s not the case. The attempt is even more complicated if the business is small, with no previous experience in using this sort of credit card payment. If you make many mistakes in setting the account, everything can take up to several months, while a proper installation can only last for a couple of days.

One of the advantages of having your own merchant account is the low maintenance costs. If there are no transactions, the account sits idly, without you having to pay anything. Since it might take you so long to finish setting it up, it’s never too early to begin doing so, especially since it costs you nothing. On a side note, the bank will check your business website or even a surrogate for it (if you’ve not finished it) before agreeing to process your merchant account application.

Moreover, if you have a start-up business, the bank might try to get advantage of you, imposing ridiculously high managing fees and dragging the account processing endlessly, so the easiest way to get a bank to accelerate their work is by applying to more than one bank.

Using a third party merchant account


These third parties are companies that process credit cards on behalf of other businesses. They process all sorts of credit card payment to your company and send you total payments at the end of each month. Obviously, these companies won’t offer their services for free. You have to pay them a setup fee for your third party account and also fees for each completed transaction. In some cases, the setup might be free of charge, depending on the company’s discounts and promotions.

If you cannot predict high revenues for your startup business, using a third party merchant account might be convenient, as the costs of setting your own account could be too high for you to handle at this initial stage. This method of accepting credit card payment is convenient if you just want to test the water and see where your business is heading towards. In addition to this, the third party will take care of all the small tasks maintaining a merchant account involves.

You can give up using third party accounts when you reach your target revenue and are willing to cover the costs of integrating your own merchant account with your business website. Moreover, by the time you go through the long and exhausting process of having a bank accepting to handle your merchant account, you are still free to accept credit card payment using the third party.

When choosing a third party to handle a merchant account for you, there are some aspects you must consider:

  • The setup fees, which are, as aforementioned, either free or very low. In this case, go for the promotions or choose the lowest fees;
  • Different third parties use different transaction fees. You might do a comparative analysis and select the company with the lowest fee;
  • Not all third parties are willing to take all the risks on your behalf and some of them actually hold a certain percent of your transaction revenue as a backup for returned items;
  • Even if more and more companies accept credit card payment, some of them are limited to this. Keeping this in mind, you should search for a third party willing to accept more types of online payment, such as online checks, messages, phone calls and emails.

PayPal, PayByWeb, 2CheckOut, ClickBank, iBill, Kagi, CCnow are just some examples of third party merchant accounts you can select from.

Your merchant account versus a third party account

Accepting credit card payment can significantly boost your online sales. The problem lies in choosing the correct option of online credit card payment, so that your overall costs of handling the transactions are the lowest possible. Resuming the above notes, while third parties offer you the advantage of setting up your merchant account within minutes and, sometimes, at no cost, they take a small fee from every transaction in your account.

On the other hand, your own merchant account might take months to setup, but once you finish the process you won’t have to be concerned with routine fees anymore. At the end of the month, what you save up from using one alternative of the other depends on your completely, as third parties constantly change their contract clauses and might boost or decrease their fees, in the context of the always competitive online market.