3rd Party Merchant Accounts are required if you don't want to pay for a resident agent in the countries of the acquiring banks or cannot qualify to do business as a Direct Merchant Account.
The 3rd Party Payment Processors has established relationship with the Acquiring Bank
- The Processor underwrites the merchant account in the case of Third Party Accounts
- Processor supplies the Payment Gateway and customer service to the merchant
Questions to ask when shopping for 3rd Party Merchant Accounts:
- How much of a Reserve is required to cover chargebacks?
- What is the Discount Rate?
- What is the Per Transaction Fee?
- Is there a Consultancy Fee (to cover cost of underwriting, connection setup, etc)?
- What client API software is compatible with the Payment Processor Gateway?
Types of Merchant Accounts
What is a Third Party Merchant Account?Sometimes referred to as an Aggregator Account, a merchant account used to process the transactions of many merchants all processing transactions under, what can be thought of as, a multitude of sub-merchant accounts. This type of account is usually owned and operated by a processor. It is ideal for merchants that do not qualify for their ownDirect (Dedicated) Merchant Account and/or merchants not wishing to setup a corporation with a resident agent in the country of the acquiring bank. This is now required for Direct Merchant Accounts per recent Visa/MasterCard regulations. It is standard for merchants to begin processing with this type of account before acquiring a Direct Merchant Account.
What is a Direct Merchant Account?Sometimes referred to as a Dedicated Account, a merchant account solely dedicated to the merchant by the processing bank. In opening a Direct Merchant Account, a merchant acquires a private merchant identification number (MID), and though still processing via a processor's payment gateway, provides their own customer service and is allowed their own billing descriptor (name and number to appear on customer's credit card statement...for Third Party Accounts, the processor's name and number would appear). Many merchants find this lowers theirchargeback percentage since customers recognize the charge.
Through a Direct Account, merchants more likely than not enjoy a lower discount rate with the bank and begin to establish their own offshore credit history with the processing bank. It should also be noted that, even though a Direct Account is essentially a merchant's own account directly with the bank, they are still able to take advantage of the processor's payment gateway technology and customer service if they'd like while, at the same time, control their own merchant account. A Direct Account acts as a comprehensive platform enabling merchants to perform a multitude of processing functions, including batch uploads/captures, full control of transactions, and fraud management.