Posted on March 5th, 2010If you want to be successful in selling goods or services online then you will wan to purchase a merchant account. Merchant accounts link your customer’s funds to your bank account safely, allowing you to accept payments from all kinds of credit card and payment services such as PayPal. Without a merchant account, many customer’s will not trust your site enough to even pull out their credit card! Applying for a merchant account is a relatively simple process, and it can be done from the comfort of your own home in a matter of minutes.
You have two options concerning merchant accounts; paid or free. Obviously a paid merchant account would be optimal. However if you are unable to meet the requirements of a paid merchant account, then you may need to apply for a free merchant account instead. Before you settle for a free merchant account. There are some factors that should be considered.
Are Free Merchant Accounts Free?
Although there is no setup or approval fee associated with free merchant accounts, it is important to note that there are transaction fees, and these fees are generally higher than those associated with paid merchant accounts. Therefore, while these services are convenient for people who are unable to get a paid merchant account, in the long run they are anything but free. It should also be noted that most free merchant account providers will only offer their services to be people that sell products. Meaning you cannot sell services using a free merchant account. You may also need to adhere to certain stipulations and regulations. For example, you may be required sell a certain amount within a certain time period to keep your merchant account active.
Free Merchant Account Policies
Free merchant account providers are used to dealing with people that may have bad credit or may be considered untrustworthy by paid merchant services. Therefore it is deemed necessary to impose stricter policies to protect themselves an customers from fraudulent activity. These policies are very important because they provide basis to keep your funds in reserve for a certain period of time to prevent fraud on your behalf.
This means you will have to wait longer for your funds, and in some cases the merchant account provider may issue refunds to unsatisfied customers without your consent. This has been a problem for many honest merchants, because scam artists know that free merchant account providers are quick to issue refunds no question asked. In many cases the scam artist will receive the products and then receive the refund after they have already received the order items! This is why it is crucial to be sure you are familiar with the policies of your merchant account before hand, so you can take the necessary precautions to protect yourself from fraud.
When Should You Use a Free Merchant Account?
There are many reasons why one would consider using a free merchant account. The most obvious reason being inability to get accepted for a paid merchant account. After all, a free merchant account is better than no merchant account! Even free merchant accounts give you the ability to calculate taxes, shipping charges, and to accept credit card payments.