If you have created your website and have a
product to sell, then you will need to find a way to accept
payments from your customers. When the internet was in its
infancy most people sent cheques by post, but now customers
expect much more. They want to have a choice of payment
options, and most will want to pay by credit or debit card.
Studies have shown that if your site does not accept credit
cards then you are missing out on 90-95% of sales.
Therefore you will need to utilise a payment
processor that is capable of handling credit and debit card
transactions. You can do this through either having your own
merchant account or using a third-party payment processor.
Let's start by discussing merchant accounts.
These are essentially bank accounts set up with a merchant bank
that allow you to accept payments from credit card users. The
money flows directly into your personal or business' bank
account, in a very short period of time, often about
three business days. In the past, merchant accounts have only
been available to large well-established businesses, but they
are slowly becoming more accessible to smaller businesses, and
are becoming less stringent in their criteria and credit
Third-party payment processors, such as
Paypal, 2CO and Clickbank (all of which I can recommend) are
very good for small sites, such as those that sell only
one item, or sites that have just launched, and are also
ideal for those people who cannot get a merchant account.
However, you should note that with some payment processors you
will have to wait sometimes thirty days or more to get
paid the sum total of your latest batch of sales. This
could potentially be a big problem, particularly if it's a
lesser-known payment processor that subsequently goes out
of business, because you may never get the money owed to
you. Even if this wasn't the case, you still have to wait
a long time to reinvest this money into your business and
You should also remember that whereas with
merchant accounts you own all your customer data, with
third-party payment processors they store all this information.
This means that they could potentially use this information for
their own purposes.
Another point to consider is how your choice
of payment processor will be perceived by your potential
customers. For example, a merchant account provides credibility
to your website, and appears very professional. It indicates
that you have a secure and reliable way of accepting payments,
which is an important factor for potential buyers. If you just
have a third-party payment processor, visitors to your site may
question whether you are just a small amateurish home-based
business, for example, or may think that for some reason you
couldn't qualify for a merchant account, or you lost your
merchant account. Therefore this could potentially put them off
buying from you.
I would say if you can get a merchant
account, but third-party payment processors will serve a
purpose particularly if you are just starting out selling
online, or your business is at an early stage of development.
Whichever one you choose, there are a few things you should
- Set-up fees - This varies from company to
company. Some have no set-up fees, while others can be very
expensive to set up an account.
- Transaction fees - Most are quite
low, 2-5%, but any higher than this and they can really eat
into your profits.
- Types of products accepted - For
example, don't assume that your payment processor or merchant
account will automatically accept transactions for your
- Frequency of payments - As I mentioned
above, check how often you receive payments from any sales
- Hidden charges - Read all the small-print
and make sure there are no additional fees, such as annual
fees, for example, that you may have to pay.
- Customer support - You obviously want a
merchant account that responds quickly to any customer