Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : Disadvantages of Third-Party Processors

[Benjamin]

What are some disadvantages of third-party processors versus Merchant Accounts? We all know the advantages of having a third-party processor versus a Merchant Account, but rather, what exactly are the disadvantages?

Can you guys help me out? 500 brains are better than 1. I am writing helpful content for our site, so any input is appreciated.

[adland]

1) Costs more per transaction
2) Impression isn't as professional (leaving site)
3) Charges appear under third party
4) Less control/more headaches when things go wrong
5) Limited billing options

[Darth]

What are some disadvantages of third-party processors

1) Costs more per transaction
2) Less options
3) Weekly/Monthly payment can be late to arrive
4) Could disapear next Sunday at 12.45PM with your $10,000

[bhalsted]

If you use a merchant account and can set up your cart so that people do not leave your site you do not distract them in 'leaving'. When selling things on the net you want people in your store as long as possible, You don't want to send them accross the street to make a payment, then come back to pick up the merchandise. Go find a couple shops that take you 'offsite' for payment and see if you have any urge to go to a competitor that has everything built into their site. If you have to use an offsite payment area make sure you can make the sites look as close to the same as possible.

Cheers,
Ben

[Benjamin]

Anyone else have any thoughts on disadvantages of third-party processors (like 2checkout, paysysytems, paypal, etc) in general, versus a real Merchant Account?

Adland mentioned a major difference between a third-party processor and a merchant account. Your customer's credit card statements show the third-party processor rather than the actual business name... which can quite easily confuse your customers.

[vipe]

The biggest disadvantage in using a third-party processor is how difficult it can be in moving to a real merchant account later on.

[NationHosts]

Well personal reasons for me that 3rd party is bad is mentioned above as well as 2checkout has a lot of problems with the merchant area and you have to wait to get money you don't get it right away, it's also quite limited, while you can change the design to look like your page there are things you have to list like "all services provided by 2checkout". You also can't change the form, what cards are accepted, and you don't know the users card number for verification purposes. I would just go with a merchant account as I'm planning that this month.

[brunnock]

Personally, I prefer outsourcing anything that's not central to my business. Of the 3rd party processors, I like PayPal the most. Their rates are reasonable and IPN is secure and easy to implement. I'm able to sweep the receipts into my checking account whenever I want.

I have a merchant account through Fleet, but I don't think it's worth the hassle to write the scripts to let me do what PayPal does.

[shift4sms]

In high volume or high ticket sites, cost will almost always be cheaper using a merchant account vs. P2P solution (I use P2P because the term "third party" is confusing in the cc industry, most banks use "third party" processors that are unrelated to Paypal, etc.).

But to me, the biggest disadvantage is company image. While most sites that use P2P payment solutions are perfectly legit and on the up-and-up, they give the impression as being fly-by-night. Personally, I have never used Paypal (et. al.) for any purchase other than an auction and in these instances, I knew and accepted the risk.

[Benjamin]

shift4sms, what exactly is P2P abbreviated from?

Also, are there other names that are used out there for Third-Party Processors / P2P?

If so, let us know.

[brunnock]

P2P - Person to Person

[shift4sms]

Sorry, as Sean said, Person to Person.

Other P2P solutions: While I don't care for them, Paypal is the biggest.

[Benjamin]

I've never heard them called P2P -- has anyone out there other than Sean and shift4sms heard of this term? Thanks.

[brunnock]

P2P was a fad term back when Napster was considered to be a viable business.

http://conferences.oreillynet.com/p2p/

[AussieHosts]

Originally posted by Benjamin
Anyone else have any thoughts on disadvantages of third-party processors (like 2checkout, paysysytems, paypal, etc) in general, versus a real Merchant Account?

One more point of failure.

"Esteemed Merchant

We are working diligently to resolve a technical problem at the Bank processing level which has been resulting in transactions being declined.

Here is the message the customers are receiving while attempting to finalize a purchase.

Card Declined
It was not possible to process your credit card.
Supplier:
Card Result: Unable to establish a secure connection

Unfortunately, the problems are still not resolved at this time. We are in constant contact with the processing networks, but have not received any firm estimate as to when the systems will be available.

We will continue to keep you updated concerning this situation.

We apologize for the inconvenience caused.

PaySystems Corporation"