Pros & cons of third-party payment processing. Source: pexels.com
Third-party payment processing, also known as a third-party payment processor, allows businesses to process or receive payments from their customers without creating a merchant account for processing electronic payments. It is instrumental, especially when you have an ecommerce website, allowing you to receive payments online.
If you are still starting with your business, you can consider applying to a third-party payment processor. In this way, your business can be more dynamic in transacting with your customers. If you’re still in doubt about whether you will apply for this service or not, we’ll help you make up your decision.
Below are some of the pros and cons that you need to know before indulging in third-party payment processing services.
The pros
There are tons of advantages you can benefit from this service when it comes to third-party payment processing. Today, where the trend of online shopping arose, businesses started to convert themselves into selling their products online. Below are some of the pros of payment processors:
Lower cost
Some banks charge service fees as you try to set up a merchant account for your business. It’s kind of stressful that you still need to pay up for yourself to enjoy the benefits of a merchant account. However, unlike some third-party processors, they don’t have any fees as you try to create or set up your account.
You can check some of the costs of these payment processors by reading through a PayPal review, square review, stripe review, and reviews from other companies that provide the same service.
Simple and easy to set up
Compared to setting up a merchant bank account, it might take time to finish before you can use it for your business. However, if you plan to use third-party payment processors, you only need to set up an account there with just a few taps away.
After that, your business can now accept payments online and let the payment processor do the transaction.
Countless payment options
Aside from letting you receive and process payments online from your customers, some third-party payment processors also offer other techs. For example, you can implement point-of-sale software in your physical stores to engage in physical payments.
Even though the trend today is mainly focused on online payments, it’s better to have both options in your business for better efficiency. You can choose which option you want to include in your business, and you’re good to go.
Versatile framework
As you set up your merchant account to a bank, specific agreements exist between the two parties.
These contracts are sometimes strict and cannot allow you to end the providers’ service. However, unlike third-party payment processors, they don’t require long-duration contracts as they give users freedom with their accounts.
Best for small businesses
If your business is just starting, third-party payment processing is best for you. Considering that your business is still small, there aren’t too many transactions to be expected. It will allow you to carefully manage your transactions and get used to them as your business continues to run.
The cons
Aside from the different benefits stated above, this service has some drawbacks. Therefore, it’s essential to know the cons aside from the pros. By knowing both sides, you can measure and narrow down your decision whether to apply for this service or not.
Below are the cons of third-party payment processing:
Transaction fee
Despite the freedom of terms and simplicity of setup, one of its disadvantages would be increasing fees per transaction.
Third-party payment processing services charge fees every time you use them. Hence, here’s a heads up for you not to be surprised where these charges come from during your transactions.
Froze accounts
With the versatile framework of third-party payment processors, they can freeze your account. If an account were frozen, most case scenarios would be that they have detected suspicious transactions in your account.
After a thorough investigation, they would unfreeze your account, but it would take too much time, which is terrible for the business.
Limited options
Please don’t get confused. Third-party payment processing services have versatile options, but it depends on the company. For instance, some companies are too picky with different devices, such as some of the company’s processors don’t work at all brands, which can become a hassle if you don’t comply.
Final thoughts
These third-party processors can be your key to reaching your company’s full potential in the industry. With its simple process and framework, anyone starting with their business can learn and adapt to it quickly. Now that you know the pros and cons of these services, you can make your decision. It’s now up to you whether or not to adapt to this technology.
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