Written By:
Lauren Reams
Merchant Account and Compliancy Specialist
Merchant Accounts are vital in every online offer. Without a processing source, you are a sitting duck. Knowing how to prepare for merchant acquisition is an important step before you start your actual pursuit. Once you are financially ready to start getting merchant accounts there is often a confused question of whether to pursue an offshore, domestic, or third party merchant account. Here are the pros and cons to these merchant account sources.
Third party merchant accounts are usually pursued by small businesses. This makes it convenient for businesses just barely beginning to process. Third party merchant accounts often have built in customer service programs and limited payment page control. This can be either a strength or downfall depending on your business type and ecommerce business size. These programs don’t come cheap, and are usually a little pricey for the extra support.
Mentioning “offshore banks” for some is somewhat of a turn off. Many steer clear of offshore banks because they are not familiar with their strengths. Offshore banks have different jurisdictions. According to E C M Advice, “While it might be challenging to get your product or service approved domestically because of some local laws, international banks are governed by different laws and they might welcome your business with open arms.” Offshore banks allow many different types of currencies, which will help expand your business limitations. Lastly, the monthly volume can be the cherry on the top. More offshore MIDs will allow you unlimited volume or a much large threshold then domestic MIDs can provide.
Now… before you get too excited about Offshore possibilities, there are some downfalls. Offshore MIDs are known to be able to hold your settlement, higher setup costs, and give you less frequent payouts. This can of course be avoided if you are careful and manage your account properly.
Lastly, domestic merchant accounts. These accounts are usually your number one option for processing. You have control over your payment page, terms and conditions, and your own descriptor. Payouts are usually given multiple times a week, which allows you to recycle your money faster and continue to fund your growing business.
Whether or not you choose to go offshore, domestic, or third party, make sure you choose the right merchant account for your business. Weigh out your options. Maybe the right answer isn’t just one type of merchant account, but a combination. The industry is continuously changing, make sure you are prepared and ready for the ride.