Not all online business owners who wish to start accepting payment through their website are able to apply for a dedicated merchant account. This type of account has a number of requirements and criteria that not all merchants can fulfill.
In the following article we will talk about a third party merchant account as alternate option that is set up with the help of an aggregator. The advantage of this type of account is that the acquirers have less strict acceptance criteria and it is relatively easy to get.
What are the main features of third party merchant account?
In case of third party merchant account a large bank account is created and the merchants funds are processed and then sent to the individual merchants. It can be risky because there are other companies on the same account with you. Settling transactions are under the rules established by Visa and MasterCard as well as state and federal bank regulations.
The second feature is that third party merchant accounts require customers be sent away from online shop for a short while during which the ordering will take place.
The third feature is that funds are generally distributed only once a week or once a month depending on the acquirer decision based on your business documents.
When third party account is more suitable for business?
Your business is not registered–all major payment systems require work only with registered companies. Sometimes, certain acquirers do not recognize certain countries for incorporation, thus require the merchant to set up a company in more common regions, such as Europe.
Your company is blacklisted for processing violations as being caught for high chargebacks or selling illegal goods or services.
Your business is considered as a high risk caused by low sales volume, high ticket price, products such as medicine and software, incomplete terms and policies, etc.
Your business is startup or with lower credit support. Merchants often use this account to gain experience and have the possibility to open a direct account in future.
By now, you should have an idea on the difference between a dedicated merchant account and a third party one. While both of these accounts allow you to accept payments online on your website, their advantages and disadvantages should be carefully considered.
As many businesses are different, take time to study and seek advice to see which merchant account best fits your business line.