A third party merchant account is defined as a company that accepts and receives credit and debit card payments on behalf of your business. An example of a third party merchant account is PayPal.
Such accounts are beneficial for startup businesses and small entrepreneurs as they have a low setup cost compared to opening a merchant account. However, the transaction fees may be higher when compared to a merchant account. Large corporations and big businesses can easily acquire their own merchant accounts. At times, high sales volume and/or the business industry of the merchant may make banks and merchant account providers wary, and even large businesses may fail to acquire a merchant account.
Third Party Merchant Accounts: How Do They Work?
The way third party merchant account processors work is that they provide e-commerce businesses, which are unable to obtain or afford their own merchant account, the opportunity to use the processors merchant account. This enables merchants to accept credit cards online.
Thus when a customer comes to your website, they deal completely within your website. When they are ready to order, customers are forwarded to the third party merchant account provider’s website. The best third party merchant account providers’ payment forms are intricately designed similar to the merchant’s website that the customer never realizes they have left the merchant’s website.
Advantages and Disadvantages of a Third Party Merchant Account
- Fast setup procedure
- Low application fee
- E-Commerce enabled
- A sound option for startups and new businesses without credit card processing history or low sales volume.
- Higher transaction fees
- Third party merchant account name appears on customers credit card statements, which causes confusion and sometimes results in chargebacks and refunds.
- Third party merchant account logo appears on merchant’s website to ensure the customer remembers the charge.
14 Reasons Instabill is the better option for your business
Since the birth of the e-commerce industry, Instabill has served as the merchant account provider and payment gateway for thousands of online businesses. Instabill is well known and highly regarded in the payments industry for the merchant services it provides. Here are 14 reasons why:
- Average monthly fee: $9
- Average transaction fee: 1.8%
- Online Support: Merchant account managers are available live Monday through Friday, 8:30-5:30 eastern standard time by calling 1-800-314-2713 or via chat
- Merchant has flexibility and more control
- Merchant can create customer codes, mailing lists and manage customer accounts
- Funds deposited directly into merchant’s account
- Easy access to offshore accounts
- Added Security: Instabill uses 3D Secure Processing and Secure Sockets Layers (SSL)
- Offers several types of merchant accounts
- Processes in 160 currencies
- More than 40 shopping cart solutions
- No volume caps
- Virtual Terminal available to all Instabill merchants
- Payments Page: We host it, you design it