A comparison between the third party processors and real merchant account

There are several businessmen who consider third party service providers as an alternate option to do business without possessing merchant accounts. This theory is authenticated because of the fact that in the case of third parties, there is no processing fee for application and no initial charges for setting up of the merchant account. This particular feature increases their capability to offer good services to especially, start up firms and internet firms. Now let us go through the main differences between the third party processors and a real merchant account.

A good merchant account will have charges in between 100 dollars to 250 dollars. This is the charge for setting up the merchant account initially. There will also be a monthly charge of five dollars to twenty five dollars. These firms will charge around one percent to four percent for each transaction done. These charges will differ depending upon the type of business that is done. Some companies use flat fee for the transactions. These charges range between 0.05 dollars to 0.25 dollars.

In the case of third party service agents, they do not charge any set up fee initially. They charge 2.9 percent of discount charges and thirty percent for each transaction done. There are other service providers which charge nine percent for each transaction. The service charges of various service agents vary from 49.95 percent to 29.95 percent. But these service agents charge three dollars per deal. There are service agents who does not charge monthly fee. In simple words, the costs of all the prominent third party service agents will really exceed a good merchant account which will be really beneficial for the traders. There are some service agents who provide quite a reasonable and affordable discount charge. The only expense incurred is the transaction charge of thirty percent. If a comparison is made, one reaches at an assumption that it is less costly to make use of a merchant account.  

The initial comparisons make people reach at a conclusion that pay pal is most suitable than the merchant account. They have very reasonable discount rate and transaction fee. The trader will be able to start a pay pal account within few minutes of submitting the application form. Once the information which is provided by you is verified, the merchant will be able to start receiving payments through the service agents. In the case of small time sellers and internet industrialists, pay pal is the perfect choice.

Irrespective of all the advantages, there are several shortcomings for these service agents.

There are several cases where they have failed to provide adequate support and the delay in the receiving of these requests continued for several weeks. Some of these service agents do not offer accessibility to the credit card number. The majority of the alternate options are not able to calculate the shipping fee and taxes related to the shopping carts.  

In simple words, if you are running a start up firm and the volume of sales is much low, pay pal will be the effective method. If you are running an established firm and higher volumes of sales, merchant account will be the better choice.