What’s Your Payment Processing Policy?

Determining your strategy for payment processing is as important as the services you provide in your online business. Credit card processing is the online equivalent of a cash register in a traditional business. You wouldn’t think of opening the doors of a traditional business without a way for people to pay you, and this same concept applies online. There are several low-cost payment processing options to consider before launching your online business.

Establishing your own credit card merchant account can be difficult early on in your online business venture. Your business may need to establish a solid credit history before a bank will open an account. If you are in the beginning stages of your business, this can be difficult to provide. Merchant accounts are also costly; they can add $30.00 plus to your monthly online business expenses. You may also have to sign lengthy contracts or pay high application fees. It may be a wiser decision to avoid establishing your own credit card merchant account until you are sure your business truly needs one.

In the meantime, you might want to consider a low-cost, low-commitment alternative. Several 3rd party payment processing services require no application fees and only charge processing when a payment is received (i.e. no monthly fees or contract agreements). Services such as 2Checkout, Payquake, and the popular PayPal offer great low-cost payment processing services when you are in the early stages of building a business.

One thing to consider is the fact that the aforementioned services do charge a slightly higher processing fee for each transaction. Many online business owners still maintain that this is less expensive in the long run. Reliability can also be an issue. If one of these payment processing services has problems or goes out of business, it can make a huge impact in your sales. It may be a good idea to use more than one payment processing service (i.e. PayPal and Payquake) to spread your risk accordingly. If one service encounters trouble, you can simply switch your clients to a different provider. Make sure that any 3rd party processing service you choose allows you the option to switch to a merchant account, if and when you decide to do so. PayPal now features a primary merchant account option for once you’ve established your business and your credit.