Merchant Services
There are two main ways to collect credit card payments online. You can get a merchant account yourself, or you can do a third party merchant account. There are many different merchant service providers available.
What's the difference between a third party merchant account and your own?
Own Merchant Account
Having your own merchant account means you get to bill credit cards yourself. This is a lot of responsibility! You would be storing your client's credit card numbers in your very own database, and would have the power to bill them any time you want for any amount. Because you have so much power this type of an account is a little harder to get started with.
Third party merchant account
Paypal and 2checkout are what you can call third party merchant accounts. They store the credit card numbers that charge your clients. With a third party merchant account, you basically go into your account, click "create item," decide how much to sell that item for, and decide if its going to be a recurring charge or not. Once you decide all that, they give you a link to provide your customers with. Your customers will then go to this link to signup with you. WARNING: 2checkouts largest competitor (Paysystems) was forced to shut down by MasterCard and visa when they determined their 3rd party business model to be illegal. Many people believe 2checkout will follow the same course along with many of the other 3rd party merchant providers we haven't listed. We believe paypal will never be shut down due to is size, power, and the fact it does background checks on the accounts they issue through bank account verification, along with many other security checks which weren't in place with paysystems.
Benefits and Disadvantages
Paypal
Paypal is the quickest way to start collecting payments and millions already have a paypal account. Paypal has a VERY strong member base. Even if you have your own merchant account it would be silly not to also take payments using Paypal. There are people who refuse to use anything but Paypal. A big benefit with Paypal is that you can have a debit card sent out, and have instant access to your funds! Paypal will run the shopping cart for you so it's hassle free, and no coding knowledge is needed. There are no monthly fees with Paypal since you are only charged when you sell. Paypal allows you to deposit earned funds into your bank, spend them using a debit card, or request a check.
2checkout
2checkout has very high transaction fees. There is a $49 setup fee to get started. They run the shopping cart for you so it's hassle free, and no coding knowledge is needed. 2checkout does not have any monthly fees, so you are only charged when you sell. 2checkout will pay you in the form of bi monthly checks. Because of the 3rd party market slowly being shut down by Visa and MasterCard we don't recommend a 2checkout account nor any other 3rd party merchant provider out there besides paypal.
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