No Merchant Account Needed
No merchant account needed: strategies, pros and cons.
Taking Payments Without a Merchant Account
Many hosting accounts come with ecommerce attached, being advertised
as 'no merchant account needed'. What does this mean?
Types of Alternative Payment
Taking payment without a merchant account takes these forms:
-
Payment by credit cards
-
Payment without credit cards
Pros and Cons
'No merchant account' payment methods are adopted by companies
that cannot get a merchant account, or those that find the costs
of doing so unjustified by their current level of business.
Online checks and transactions conducted by encrypted email are
slow, but are perfectly satisfactory for companies with extended
settlement periods. Wallet systems are very safe, although they
are also troublesome, particularly for users outside the USA,
and perhaps will appeal only to certain customers. Phone or 1-900
billing is currently restricted to the States, but avoids security
problems. Employing a service bureau rather than your own merchant
account runs up more in transaction charges, but the systems are
readily set up and initial charges are low.
Alternative payment systems are not always the poor relation
to merchant accounts, moreover, but can in fact be safer and more
reliable. Using a service bureau means that your merchant account
can't be suddenly withdrawn for reasons beyond your control (e.g.
excessive chargebacks) and you won't have the nightmare of extracting
receipts from a fraudulent or incompetent ISO.
Finally, it should be remembered that many customers do not
possess a credit card, and countries like Germany, Russia and
much of the third world do not use them anyway. To sell here,
you'll have to provide other means of payment.
No Merchant Account: Outsourcing to Service Bureaus
Service bureaus handle the whole process of taking real-time
credit cards online. After selecting their purchases, customers
simply click on a button at the merchant's website, and are seamlessly
transferred to the service bureau for credit card processing.
Many such systems exist, each with their own rules. Appraise the
extensive listing on our resources
page to find the best for your business. More details are
available in our product comparisons listings — for bureaus
that provide a shopping cart and
do not provide a shopping cart.
Without Credit Cards: Wallet Systems
The customer pays funds into a secure account ("wallet")
which is then accessed by e-merchant, thereby avoiding the need
to send confidential information directly to the merchant. Current
systems are listed on our resources
page. Our product listing provides
more details.
Without Credit Cards: 1-900 Billing
Rather than disclose confidential information, the customer has
simply to add payment to their monthly telephone bill. Suitable
for smaller payments, the arrangement is currently restricted
to the USA, though extensions to Europe are periodically announced.
Our resources page has
a short listing. Our product listing
provides more details.
Without Credit Cards: Online Checks
Customers may be happier having a check drawn on their bank account
than giving out their credit card details. Banks can charge extra
for processing these checks, it should be noted, though online
checks currently account for 10% of online payments in the States.
Our resources page has
a short listing. Our product listing
provides more details.
No Merchant Account: Encrypted Email Transactions
Small businesses can always accept credit card details by encrypted
email if both parties employ similar security
measures. What is covered here, however, are third-part systems
that facilitate the process of payment, adding ease of use and
safer security measures. Each works somewhat differently, and
is listed on our resources
page.
You'll benefit from the additional information on 'no merchant
account needed' provided by our e-book.
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