Accept Credit Card Without A Merchant Account

Although it is not possible to accept credit cards without a merchant account, it is possible to utilize the processing accounts and/or services of a third-party to accept charges.

The closest possible way to accept credit cards without a merchant account is to utilize the processing services offered by PayPal. PayPal is free of long-term contracts and monthly fees that are associated with a typical merchant account. However, many businesses find that PayPal has not yet graduated to a true commercial status, and that it is better suited for the likes of EBay power-sellers and small E-commerce web sites. PayPal is a great option for businesses or individuals that sell a single product or service online, or for those who have a low processing volume and would not be able to afford the fees associated with a typical merchant account.

The processing fees that PayPal charges are pretty reasonable when one takes into account how easy it is to get set-up with an account, and the flexibility the account offers thereafter. The downside to PayPal is that it is not as user-friendly or robust as a shopping cart/gateway combination that is used with an individual merchant account. In most cases a customer must have a PayPal account of their own before they are able to purchase product or service from a business that utilizes PayPal's services for their processing needs. A good portion of online shoppers are not willing to take the time necessary to open a PayPal account, and they will simply find a competitor where they are able to quickly enter their credit card number to complete their purchase.

Online businesses with multiple products and/or services, or business with moderate processing volumes should consider an individual merchant account over PayPal. More often than not the money saved through the lower transaction fees of a typical merchant account are more than enough to justify the higher monthly fees.

Product-based business should also consider distribution companies for their processing needs.

Like with PayPal, a merchant will not need their own merchant account to accept credit cards using an online distribution service. Instead, these companies will sell your products through their web site and network of affiliates. They will accept payment using their own merchant account, and they will deposit funds into your account after their fees have been deducted. In fact, you are not really accepting credit cards at all when you sell product through an online distribution service; the distribution company is accepting the payment on your behalf.

Using a service like this for your processing needs has its pros and cons. The biggest downside being the hefty rates charged to process transactions. There is also a lack of flexibility because your product is sold through other web sites instead of your own. Of course, the positive side is that you won't need your own merchant account, or even your own e-commerce web site for that matter. Some of the more popular online distribution services are listed below with links to their respective web sites.

Bad credit, low processing volume, and avoidance of monthly fees are the main reasons why most businesses and individuals want to avoid opening their own merchant account. Granted, in some situations it is best to utilize the services of companies like those mentioned below, but all too often people don't consider opening their own merchant account because they have heard horror stories, or they think that merchant accounts are too expensive. Before opening a PayPal account, or an account with a distribution service, do your homework. Learn about merchant account rates and fees, and whether or not these fees would even apply to your business.

Those who read this article may also be interested in:

PayPal - Founded in 1998, PayPal, an eBay Company, enables any individual or business with an email address to securely, easily and quickly send and receive payments online. PayPal's service builds on the existing financial infrastructure of bank accounts and credit cards and utilizes the world's most advanced proprietary fraud prevention systems to create a safe, global, real-time payment solution.

2CheckOut - 2Checkout.com, Inc. (2CO) is the online distribution center for over 300,000 tangible or digital products and services. Established in 1999 and headquartered in Columbus, Ohio, 2CO provides turnkey e-commerce solutions to thousands of business customers around the world. 2CO's proprietary technology supports back-office functions including financial reporting, tracking, fraud prevention, affiliate tracking, customer service and sales tracking.

ClickBank - ClickBank is the online distribution center for over 10,000 digital products and services that are delivered entirely over the Internet itself (via web pages, files, or email).