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Online Payment Acceptance Chapter 3: Third Party Credit Card Processors
There is a third option available to accept credit cards. If you have little cash on hand or sell a limited number of products, you can try one of the alternate processing companies (3rd party processors). Instead of paying set-up fees, transaction fees, statement fees, discount fees, and the like, you'll simply pay 3-15% of the sale price of each product. I don't recommend using these companies in the long-term. They are excellent if you are just starting out and you don't need the cash from sales right away (CCNow, for example, withholds part of the proceeds from a sale for up to three months to protect against charge backs) but in the long run they will end up costing you a lot more. One of the biggest catches to using a 3rd party processor is the fact that you have to put your order form on the processors website, you cannot host it. If this is a problem you'll have to invest in a real merchant account for your business. Another downfall is you only receive your funds once or twice a month, unlike every 2 or 3 days with a real merchant account. Ensure that there are no monthly sales caps. Some 3rd party processors may limit the amount being transacted each month. If you do a low number of sales per month then this may not affect you. However, if you perform a lot of high volume sales then investing in a real merchant account for your company is essential. Once you've generated enough capital to support a real merchant account for your company, get one. If you're a Non-U.S. based business, using a 3rd party processor would be your best way to go, at least until the cost for a real merchant account drops. Must see article: At What Point Is a Merchant Account Better Than PayPal or CCNow? (or any 3rd party processor for that matter) This article provides a detailed analysis complete with graphs and tables about when it's a good time to purchase your own merchant account. *Highly Recommended*
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