CC MERCHANT ACCT SERVICES SUPPORT MERCHANT ACCT 101

Alternatives to a Merchant Account

While not optimal, there are a few alternatives to a merchant account. A merchant account generally affords you lower fees and rates than the alternative options would.

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Alternatives to a Merchant Account

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Internet Payment Service Providers (IPSP), Master Merchants or Aggregators are e-commerce or internet based alternatives to using a merchant account. IPSPs are often used by those who have smaller or infrequent credit card transactions (micro-merchants) or those that find it administratively difficult to use a merchant account. If you accept credit cards through an IPSP or Aggregator, you are called a "sponsored merchant."

An IPSP must maintain a registered merchant account and also register its sponsored merchants who accept credit cards under the IPSP master account. One generally pays higher fees to accept credit cards through an IPSP rather than through a merchant account.

Prime examples of IPSPs are Amazon.com, eBay, and PayPal. Other IPSPs or Aggregators include www.ccbill.com, www.ibill.com, and www.ccnow.com.

A word of caution: One cannot use the merchant account of another business to accept credit cards without proper IPSP registration. To do so would be "factoring" or money laundering, a serious violation of MasterCard and Visa rules and possibly a crime.