In the detailed article, you will get vital information about Third Party Credit Card Processing Companies. If you are startup merchant, then terms like “third-party Credit Card processing” or “third party CC processing” can be a bit confusing. Do not worry explore this article and you will come to know what exactly these are. To excel by generating a massive amount of sales, then you would require a payment processing solution. The best option is to start accepting credit and debit cards for your business. The most straightforward approach to get a payment processing solution is to approach a local bank. Unfortunately most of the time it’s hugely time-consuming as well as challenging to get a direct merchant account from an acquiring bank directly. If this is your scenario then you should approach a 3rd Party Credit Card Processing Company.
A Third Party Credit Card Processing company processes transactions for the merchant on its merchant account. It means that the merchant does not require a merchant account. The Merchant can continue using the services offered by the third party online payment processing company. Here are multiple advantages listed for third-party credit card processing.
Advantages Of 3rd Party Credit Card Processing
- Fast Setup. Most of the times 3rd party merchant account providers offer accounts to merchants within 24 working hours. This saves much time as most direct acquirers take 7 to 15 days to approve an account.
- No Setup Fee Or Upfront Charges. Startup merchants usually do not have an idea of how much processing will happen in every calendar month. Startups do not prefer to pay any upfront charges or setup fees. Most third party CC processing companies do not charge any initial cost.
- Fixed Transaction Fee. Direct acquirers follow different pricing models like Tiered pricing, Interchange Plus, and Flat pricing. These 3rd party payment gateway companies usually offer flat pricing model. It is hugely beneficial for a Startup merchant as they only pay a small fixed percentage on each successful transaction.
- Secure Processing At Low Cost. When you accept credit cards online, you need to show that the credit card transactions are secure. Direct acquiring bank will ask for PCI DSS compliance certification. The benefit of working with the third party card processor is that the 3rd party platform itself handles PCI compliance and they offer hosted payment page to the merchant.
- Easy Integration. These days merchant service companies believe in offering a full stack solution to businesses. They proactively help merchants with API documentation as well as readymade plugins. These plugins are easy to integrate. After uploading the plugin to the web server, the merchant only needs to add few details in the plugin. These are usually MID, Username, Password, Salt Key and Secure Key. Most processing companies offer plugins for well-known content management systems like Shopify, WordPress, Joomla, Prestashop, Magento, Drupal, and others.
Disadvantages of using a 3rd Party CC Processing Company.
- Less control. Please note that you do not directly work with an acquiring bank. Your money is under the control of the Third Party Credit Card processing company. If this company is unable to mitigate the risk on the merchant account, then you may face financial issues. 3rd Party Credit Card processing companies implement some aggregation model. They offer access of the merchant account to multiple sub merchants. All five fingers are not the same. One business may have a higher risk than other. These high risk merchants may create huge challenges for Low-risk merchants.
- No Uniqueness On The Payment Page. If you run an organization, then you would be interested in maintaining the excellent brand representation on every page of your website. Most of these processors offer hosted payment page which cannot be customized a lot. These pages do not usually relate to the brands color and font scheme.
- Higher Fees In long Term. Your processor may offer you fixed pricing, and this may work wonders for you when you are a startup. As soon as you start grabbing traction, then you will realize that you are spending much money on the transaction fees. If you work with the direct merchant acquiring institutions then maybe they can offer you interchange plus pricing model. This model can be highly economical in many cases.
- Delayed Payout. Cash flow is vital for any online business. To fulfill orders you will need cash flow. When you work with the direct acquiring bank then most of the time they settle payments to you in one or two working days. When you work with a third party payment service provider, there is a possibility that they will add an arrear to the settlement period. It means you will have to wait for a specific number of days to get paid from the third party CC processing company.
Who Should Use A Third Party Credit Card Processing Company?
Now that we have discussed the advantages and the disadvantages of these kinds of processing solutions let’s quickly look at the profile of an organization that is best fit for this kind of processing service. If you a startup merchant and your application have been declined by local, national or International direct acquiring institution then there is a huge possibility that these solutions can work wonders for you. These options can also be useful for any organization that is struggling with a bad credit score. If you are not getting any processing option for your new E-commerce website, then it is better to join hands with the third party CC processing company. Please keep in mind that you must ensure that these accounts stay in good shape for a long time. Create a good processing history. Your account statement works pretty much like your credit score when it comes to approval of new payment gateways and merchant accounts. Establish a unique relationship with your third-party processing company and maintain a very low chargeback to sales ratio. After 3 to 6 months you can approach any direct acquirer, and this time they will be able possibly able to say Yes.
Quadrapay works as a re-seller for various processing companies. We believe in adding value to merchants processing requirement by connecting these valuable merchants to reliable processors across the globe. If you are struggling to get a solution for your business, then feel free to send an email on [email protected]. You can also apply on the website by filling the small merchant account application form. When you submit the information, please let us know that what kind of solution do you need as we can help with various processing option that include Electronic check, ACH, Online Credit Card processing and Retail Credit Card processing.