Accepting credit cards online is very important to any company wanting to successfully sell goods and services on the web. When businesses started selling online it was agreed that using credit cards for Internet purchases was not a good idea, because it was trying to apply an offline technology to the Web. New companies trialled micro payment systems such as “beenz”, but none of the e-currencies took off. Here we are, ten years on from the people starting to sell on the web, still typing in credit card numbers to buy online and accepting credit cards as payment for products online is still hugely important.

Basically, there are two different ways to accept credit cards online. Let’s compare merchant accounts. Businesses can either apply for their own merchant account, which allows the business to process credit cards in their own business name, or the business can elect to use the services of a third party payment service, who does the actual credit card processing on behalf of the business selling the products. Getting a merchant account has higher upfront costs, but has lower per item costs. Using a third-party payment service costs less initially, but has more expensive per sale costs.

The decision as to whether or not to go for a full credit card processing account or use a third party processor is only a question of doing the math. Consider these different business types and compare merchant account benefits…

In most cases, established businesses who are already trading locally and want to expand online will most likely be suited to getting a merchant account. Most likely, It’s most likely that they will already have an offline merchant account and will expand the remit of that account to also do “MOTO”, which is “Mail Order Telephone Order” credit card orders and simply means that the credit card holder is not present at the point of sale.

For one-person businesses starting starting to sell on the Internet, it is important that they consider testing their sales using a third party service provider. The advantage to the new business is that there’s next to no upfront cost which means they can test their business model quickly and easily. If sales boom, they can eventually look to reducing the per-item fees by applying for their own merchant card processing account. If the market isn’t profitable, they can quickly exit the marketplace without having expended much capital to get a credit card processing account.