Other Considerations About Credit Card Processing & Alternative Payments Methods

Third-Party Credit Card

Processing Merchant Accounts

Credit card processors label anyone who processes transactions a merchant and hence your processing account is called a “Merchant Account”. Merchant accounts are financial accounts through which payments are made.

Some solutions for processing credit cards do not require you to have your own merchant account. This may seem appealing since it can eliminate the paperwork to establish your own account and, in some cases, eliminates the monthly fee to have your own merchant account. However, unless you expect to process very few transactions each month, such arrangements expose you to lots of potential problems, including delays in receiving your funds and constituent confusion when the name associated with the transaction on their credit card bill doesn’t match your organization’s name.

Alternative Payment Methods

Credit and debit cards are certainly the most widely used methods for making online payments, but there can be advantages to offering the option of making payments via “eCheck”, which are processed through the Federal Reserve ACH (automated clearing house). Not only can this be less expensive, since eChecks typically incur a flat per transaction fee instead of a percentage of the transaction, but ACH transactions work very well for monthly giving programs. The reason is that unlike credit cards, they don’t involve a card expiration date and donors change bank accounts far less frequently than their credit card account.