Being able to take credit cards is very important to any business wanting to actively sell goods and services on the web. At the dawn of online business it was understood that relying on credit cards was not ideal, because it applying an offline solution to the Internet. Various companies tried to offer online payment currencies such as “flooz”, but none of the e-currencies took off. The truth is, roughly a decade on from the people starting to sell on the web, still typing in credit card numbers to buy online and so accepting credit cards when selling goods online is still vital.

There are basically two different ways to accept credit cards online. Let’s compare merchant accounts. A business can either sign up for a merchant account, which allows the business to process credit cards directly, or they can go with a third party service provider, who actually processed the credit card orders on behalf of the business selling the products. Getting a merchant account costs more initially, but has smaller per sale costs. Using the services of a third party solution costs less upfront, but has more expensive per transaction costs.

Making the decision as to whether or not to get a full merchant account or use a third party payment service is simply a question of working out which would cost more money. Let’s look at two different business types and compare merchant account benefits…

In the main, merchants who are already trading locally and simply want to start selling on the Internet will most likely be suited to getting a merchant account. Most likely, Usually they will already have a real world credit card processing account and will tailor that account to add the ability to do “MOTO”, which is “Mail Order Telephone Order” credit card orders and simply means that the card holder isn’t present at the point of sale.

For micro businesses starting starting to sell on the Internet, it’s strongly suggested that they begin by testing their sales using a third party processor. The advantage to the new business is that there’s next to no initial cost so they can test their business model quickly and easily. If the market is profitable, they can consider reducing the per-transaction fees by applying for their own credit card processing account. If the market isn’t profitable, they can quickly leave the marketplace without having paid significant upfront costs to get their own credit card processing account.

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