Accepting credit cards online is critical to any website wanting to actively sell anything on the Internet. Back in the early days of the Internet it was understood that accepting plastic was a bad idea, because it was trying to apply an offline solution to the digital world. Lots of businesses trialled virtual currencies eg "beenz", but the web-based currencies didn't flourish. Yet, more than ten years on from the commercial birth of the Internet, most websites are still using credit card to make online purchases and therefore accepting credit cards when trying to sell things online is still as important as ever.

There are basically only two different ways to accept credit cards online. Let's compare those two methods. A business can either sign up for a merchant account, which allows them to process credit cards via a bank gateway, or the business can elect to use the services of a third party payment service, who processed the credit card charges for the merchant. Obtaining a full merchant account has higher upfront costs, but has lower per sale costs. Using a third party service provider costs less upfront, but has higher per item fees.

Making the decision as to whether or not to get a full credit card processing account or use a third party processor is simply a question of running the numbers. Let's look at two different business types and compare merchant account benefits...

In most cases, merchants who are actively trading offline and simply want to start selling on the Internet will most likely be suited to obtaining a merchant card processing account. It's most likely that they will already have an offline merchant account and will tailor that account to add the ability to do "MOTO", which is "Mail Order Telephone Order" processing and only means that the card holder isn't present at the point of sale.

For small businesses starting to sell products online, it is strongly suggested that they begin by testing their marketing using a third party service provider. The advantage is that there's very little initial cost so they can test their business model cheaply and easily. If the market is profitable, they can think about decrease the per-item costs by getting their own credit card processing account. If the market isn't profitable, they can quickly exit the market without having paid significant upfront costs to get their own merchant card processing account.