PayPal and services of that nature, in my view, serve a true
need. If you are selling products on Ebay as example,
a Third Party Processor can get the job done. These work
best when you are in touch with the person who wants to
pay you and you can direct them properly to the steps
to join the Third Party Processor service if necessary
- which may be required in order to transfer funds to
you. If they don't make it through the process you can
contact them to follow up and make sure you get your funds.
If your monthly volume of sales is low (considerably less
than US$ 1,000.00) then you may be able to save on monthly
servicing fees and find that a solution such as this works
just fine. As soon as you approach US$ 1,000.00 per month
in credit card volume it's time to consider your own Merchant
Account because the Third Party Processor is typically
not saving you any money at this level of sales.
A few things to be aware of...
Some Third Party Processors hold your money as long as
possible in order to benefit from the "float". Make sure
you know the time it will take to receive your money and
you may find that as your sales grow getting your money
more quickly is more important to you.
Make sure you know the process that a paying customer
will need to go through in order to pay you. As your sales
grow, will you lose orders because of the extra steps
necessary to join your service, deposit funds, and then
transfer funds? This can be inconvenient to a paying customer
who just wants to give you their credit card information
and be done with it. Maybe this is not a problem if your
number of transactions is low but doesn't it make sense
that you could lose orders if you are adding extra steps?
It doesn't take very many orders to lose to justify investing
in your own Merchant Account and maximizing the convenience
of your customers to pay you.
Appendix D has a more in depth look at some of the concerns.