Advantages and Disadvantages of Online Payment Systems

Advantages and Disadvantages of Online Payment Systems

Typically, Internet merchant accounts are provided through an acquiring bank (or acquirer) that lets you accept credit cards, and sometimes other types of payments, online. As is the case with any business decision, there are advantages and disadvantages to online payment systems and other types of credit card processors.

In general, advantages tend to revolve around having direct control of the payment processing system. Disadvantages tend to revolve around mechanics, security, and logistics of being responsible for the entire payment process.

Advantages of Merchant Accounts and Other Online Payment Systems Merchant accounts and third party payment processors provide needed online services. Advantages include

Customer convenience - Online merchant accounts save site visitors the extra step of writing and sending a check or calling in an order.

Increased functionality - Internet processors also enable Web sites to be direct sales generators rather than simply lead generators or online brochures.

Additional direct sales channel - Credit card processors help you add Internet sales as a revenue stream.

Immediate authorization - With automation, you know immediately if an Internet payment is valid. No waiting for checks to clear.

Streamline payment process - With Internet merchant accounts and other payment providers, there are fewer steps necessary to assure valid payment as compared to less automated processes.

Disadvantages of Internet Merchant Accounts

Like any other technology, there are disadvantages to online payment systems. Some of the disadvantages of having your own Internet merchant account include

You are responsible - With your own Internet merchant account, it is your responsibility to maintain site function, resolve field service issues, etc.

Fees - Various monthly fees are associated with Internet merchant accounts.

Fraud - As a merchant, you may have to directly deal with credit card fraud.

Security issues - Internet merchant accounts are only one piece of a reliable, secure payment system. Private, sensitive information such as credit card numbers can be stolen or altered; system integrity can be breached; and Web site spoofing are all risks with weak security systems.

Agreements - Internet merchant accounts come with long agreements. Often, you are committed to minimum time frames and/or dollar minimums.