Being able to take credit cards is critical to any website wanting to successfully sell goods and services on the web. At the dawn of online business it was agreed that using credit cards for Internet purchases was a bad idea, because it applying a dirt-world technology to the Web. Lots of businesses launched micro payment systems for example “flooz”, but the web-based currencies didn’t flourish. And so, approximately 10 years on from the launch of businesses online, still using credit card to make online purchases and accepting credit cards when offering things online is still vital.

Basically, there are two 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 via a bank gateway, or the business can sign up with a third party service provider, who actually processed the credit card orders on behalf of the company. Getting a merchant account costs more initially, but has lower per transaction costs. Using the services of a third party payment service costs less initially, but has higher per transaction costs.

The decision as to whether or not to get a full credit card processing account or use a third party solution is just a question of crunching the numbers. Consider these different business types and compare merchant account benefits…

In most cases, merchants who are already trading locally and want to expand online will most likely be more suited to getting a merchant account. Most likely, Usually they will already have a real world credit card processing 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 cardholder is not there at the time of purchase.

For one-person businesses starting out online selling new software or a new ebook, it’s strongly suggested that they begin by testing their marketing using a third-party service provider. The advantage is that there’s hardly any upfront cost so they can test their market easily and cheaply. If sales boom, they can think about reducing the per-transaction costs by obtaining their own merchant account. If sales are poor, they can at least exit the market without having expended much capital to get their own merchant account.

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