How a third party processor differ from a merchant account provider. This will guide you in choosing the merchant account provider that suits your needs and preferences.

A third party processor is directly connected to a credit card terminal while a merchant account provider entails different types of online services as well as various forms of payment. These two have a common function - to provide a hassle-free payment transaction to both the merchant and the customer.

For e-Commerce, this is a network of merchants sharing one direct merchant account. Upon purchase of an item, the third party processor directly transacts such payments from the client's credit card to the retailer's bank. The bank has the sole responsibility of the transfer of funds or payments. This is usually recommended for the following situations:

Newbies or non-registered businesses

This will surely benefit starters because it leaves them with no financial obligations because this has no monthly fees, which is hasse-free and worry-free for account holders.

Block listed

Businesses who acquired a bad credit record can still avail for a third party pocessor as this is solely under one merchant's name and not the business itself.

High risk

Some high risk transactions like online payments could be fraudulent and may compromise the merchant account's financial status. Because of this high risk processing, third party processors usually require a higher service fee to cover the cost or such risk.

Inability to set up a merchant account

Businesses who have difficulties in setting up a merchant account can hire a third party processor for payment transactions online. The prime requirement is to follow their terms and conditions  to continuously acquire their services.

It is the mediator between the credit card company and the merchant. It facilitates the transfer of such payment from the customer's bank to the merchant's bank account, and handles the necessary payment procedures. A merchant account provider may have a lower transaction fee, but it usually requires monthly and other service fees.

Both of these account providers differ in method of transfer, rates, and security.

Acquisition of services

Third party processors requires maximum number of applicants for their system so that there will be lesser transaction fees provided by the division of the total sum by the members of the system. Whereas a merchant account provider usually requires meticulous documentations and financial statement of accounts to be verified.

Risk taking

Third party processors allow their banks to be responsible for the payment transactions from the customer to the merchant. This is why they only charge lesser fees. On the other hand merchant account providers prefer physical business transaction establishing a good rapport to their clients as well as the customers of such account holder.

Competition

Many or most of the merchant account providers provide an irresistible offer to maintain their client's needs and preferences. They let their clients enjoy discount rates and low fees from start-up to monthly fees to be able to compete with other merchant account providers.

Whatever the type of e-Commerce service is, it is of utmost important to choose wisely the best merchant account provider that will surely benefit your business as well as your customers. You must not rely on hearsay but you must depend on your own judgement as a business owner. Whatever the cost is, an excellent customer service must be established by the merchant account provider or processor.