When an entity accepts credit card orders on the behalf of another company, namely usually a bank or other merchant account establishment, this entity is called a third-party credit card processor. This is often the way e-commerce merchants choose to go to set things up so that they can accept credit cards, because they do not need to go through the process of setting up an actual merchant account this way. However, the drawback to this method is that the merchant has to be able to sell enough goods or services to cover the extra fees charged by the third party. This method works by having the credit card process go through the third party instead of directly through the merchant.

The third party has a merchant account with a particular entity, such as a bank. The online merchant who wishes to establish credit card processing privileges uses the third party’s merchant account privileges to accept orders for their own company.

This is generally a very expensive way to go for merchants to accept credit cards, but in some cases is also the best way, since it’s very easy to set up and merchants can be in business very quickly. It’s also a good way to go for online merchants who may not have the credit rating, business history, or other requirements necessary to set up a merchant account directly, themselves.

If you’re looking into setting up a business or you’ve started one already, you probably already know that at some point you will need to be taking credit cards. Credit cards make your business much more attractive to customers because they provide convenience, offsetting any drawbacks you have from extra fees you’ll incur by setting up a merchant account and maintaining it.

If you need to set up a merchant account, you could do so either through a bank, to intermediary, or through third-party provider.

If you have good credit and you’ve been in business for at least 12 months, probably your best bet is to go through your bank. Of course, you’ll need also to prove that your solvent and that your business is well established and provides a profit. Oftentimes, banks are loath to establish merchant accounts with new businesses because they lack this history, but it’s also often true that banks will send you information about a merchant account when you open a new business account with them, for example.

Therefore, it behooves you to at least look into setting up a merchant account with your bank. Not only does doing this provide you with more flexibility and control, but you are actually working with a face-to-face entity and not a faceless one, as you would with a third-party account.

The second way to establish a merchant account is to an intermediary. Oftentimes, this is a good way to go if you lack the experience to do this yourself and/or you don’t think you’re quite a candidate for a merchant account, such as because of a spotty credit history or lack of history.

However, sometimes an intermediary can find you a bank that will deal with you and will get you the best rates possible. At the very least, the intermediary has the experience to handle a bank in ways that you may not have the experience to do so yourself. Therefore, using an intermediary is a good second choice over choosing a bank yourself.

The third option is to go through third-party provider, such as one of the many you see on the Internet; some of these providers have become so innocuous that customers trust their names enough to do business with you just because you use them.

However, you should know that third-party providers, despite their convenience of set up and use, do have drawbacks. One is that you don’t have the personal control you do with intermediary or direct bank contact. You’re at the whim of the provider as to when you’ll actually get the money you’ve earned from your customers through credit card purchases.

For example, usually with intermediary or direct bank merchant accounts, you get the money from a customer purchase within 24 to 48 hrs of that purchase. Oftentimes, though, intermediaries only send you payment once every two weeks to once a month. Therefore, you need to make sure that you can keep your business afloat with just monthly payments instead of daily payments, for example.

However, third-party providers are convenient because set up is usually quick and easy; oftentimes, you don’t even actually need a merchant account of your own to do it. The company that is the third-party provider provides that function for you. Their fees are also much higher than with traditional intermediary or direct bank accounts, though.

In short, if you’re setting up a merchant account, you have a variety of ways to do it. Some are more expedient than others, while others are more expensive than others. Depending on your credit history and business history, you may only qualify for a third-party provider, for example. However, if you do your homework, you should find the best set up for you.