Merchant Accounts vs. Third Party Accounts for Accepting Credit Cards Online

To sell on line it is important to be able to accept credit card payments. There are basically two ways you can accept credit cards. One is by opening a merchant account and the other way is to open up a Third Party Account with companies such as PayPal or Clickbank. http://clickbank.com/overview.html?hop=mariobox

Merchant accounts can be expensive as they charge a fixed fee and also a percentage of each sale, which has a minimum limit that you must reach and if you don’t reach it you have to pay a set fee.

Opening a Merchant Account can be expensive for new small business, as you often have to pay an application fee (even if you are not accepted and a set up fee (around $25) after you site is accepted. Then each month you have to pay a monthly fee of around $22 plus a percentage of each sale (around 2% or 3%). Also if you do not make enough sales you still have to pay a minimum amount of around $15.

It is easy to open up an account with PayPal and is a convenience and inexpensive way to accept credit cards. This option offers small businesses a quick and easy way to accept credit card payments. Using PayPal by-passes the need to open a merchant account, plus, the sign-up process is much easier and faster: you can literally sign-up, be approved and start accepting payments. There is also a gateway fee which provides secured access for the transaction which is charged by either you web host or an independent gateway company. PayPal charges a set percentage of a sale and a cost per sale of around $.30 per transaction which it only charges when a sale is made. A third party service can really save you money if your sales are not high.

If you are a small business and do not plan to expand too much a third party option can be a really good option, especially as PayPal also gives you an option of a basic shopping cart which will be very useful for many user. I really wish I knew about this option in two years ago as I could have made at least $1,000 in sales of a book a published in one year.

PayPal has over 35 million accounts and is a great option if you are selling less than 20 products and less than 50 sales per month. PayPal can also be used to bill people for services that you render and for non-profit organizations to collect money on the Internet.