Why Third-Party Payment Processing Is Costly And Unnecessary
TABLE OF CONTENTS
- Payment Methods Importance: The evolution of payment methods has made cash and checks obsolete, and businesses must decide how to accept credit and debit card payments, with options including a third-party payment processor or a merchant account.
- Third-Party Payment Processor vs. Merchant Account: Small or new businesses often choose third-party payment processors for ease of setup and lower initial costs, but it’s important to consider the long-term implications.
- Risks of Third-Party Payment Processors: These processors often lack robust security measures, potentially exposing businesses to cyber theft. They also tend to have inadequate customer service and technical support.
- The Cost Factor: While third-party payment processors may appear to have lower fees, they often charge higher individual transaction fees, making a merchant account an ultimately more economical choice.
Business owners and operators are responsible for making decisions that affect a company’s ultimate success or dismal failure. As the old saying goes, if you cannot stand the heat, get out of the kitchen. One of the major items that require a quick and decisive decision is how your organization will receive payments by credit and debit cards. Cash is no longer king. Checks will soon be as extinct as the dinosaurs. It is not a matter of IF your business should accept credit and debit card payments – it is a matter of HOW to do so.
Third-Party Payment Processor vs. Your Merchant Account
That task can be accomplished in one of two ways. Your business can use a third-party payment processor or set up a merchant account with a credit and debit card payment specialist like Payment Savvy. Far too many small businesses choose to use third-party payment processors at first. This holds especially true if the company is newly formed. It is essential for business owners and operators to look at the big picture before making this decision. Third-party payment processing applications may be tempting because they are easier to set up and cost less initially.
The Risks of Third-Party Payment Processors
However, you get what you pay for. There are some significant reasons why more established companies would never process their credit and debit card payment transactions through third-party payment processors. It pays to follow their lead. Otherwise, the reputation of your business may be at risk. For example, third-party payment processing companies typically incorporate downloadable smartphone applications as their primary interface with customers.
This method does not provide the same level of overall security/cybersecurity that a merchant account offers. Is a quick setup worth risking a cyber theft? The answer is an obvious no. Your business is responsible for protecting the financial information of each customer making a purchase. One data breach can spell disaster for any sized company. Just imagine what it could do to your business. Third-party payment processing entities are famous for lacking quality customer service and technical support.
Making an Economical Choice
Keep in mind that they reside in the discounted services sector. You may very well end up spending countless hours on the phone before the issue is resolved. That is to say if the problem is ever resolved. Is saving a few dollars on monthly service fees worth the risk of wasting a significant amount of your valuable time and aggravating your customers/clients? Once again, the answer is a resounding no. Although third-party payment processors do not charge monthly service fees, the individual transaction fees are significantly higher than merchant accounts.
They can be upwards of double. That means you are overpaying every time the proverbial register rings. At the end of the day, a merchant account is also a more economical choice.
Apply for a Merchant Account
Payment Savvy specializes in providing businesses of all types with the ability to accept credit and debit card payments through the use of a merchant account. Please contact Payment Savvy today to review your options, apply for a new merchant account, and obtain answers to your questions. We look forward to hearing from you and working with your company.
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