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Should You Go With A Merchant Account Provider Or A Third-Party Processor?

When choosing a payment processing solution, there are a few different options to choose from. You can go with a merchant account provider, or you can go with a third-party processor.

Merchant account providers offer more features and benefits, but they also have higher fees. On the other hand, third-party processors are more affordable, but they don’t offer as many features.

If you’re wondering which one is better, then here are a few things that you should consider when choosing between the two options.

Your Business Needs

If you are a small business, a third-party processor may be the best option for you because it is usually cheaper and easier to set up than a merchant account. Third-party processors are typically less likely to require contracts, and you will generally not have to pay monthly fees or any other setup fees.

A merchant account provider would be better if you are a larger business or need more features. Merchant account providers can offer various payment methods, including credit cards, PayPal, and checks.

No matter what type of business you have, it is vital to research and find the right provider. There are many different providers out there, so take your time and compare their rates and services before deciding.


One of the most important factors to consider is your budget; you’ll need to decide how much you’re willing to spend on processing fees. If you’re a small business that’s just starting, your budget may be tight, and you might not be able to afford the upfront costs associated with opening a merchant account.

Third-party processors may be a better option for your business if you’re on a tight budget. It’s because third-party processors don’t require any upfront costs, making it easier to get started accepting payments through them.

To start accepting credit card payments via PayPal or another type of third-party processor, all that’s required is to create an account and add a payment processing gateway to your website.

On the other hand, if you process relatively large amounts of money each month (over $50,000), it’ll likely make more financial sense for you to open a merchant account. It is because most third-party processors have processing limits, meaning that you won’t be able to process more than a certain amount of money each month through them.

So if you’re expecting your business to grow and you’ll need to process more than $50,000 per month, then it’s best to go with a merchant account provider.

Fees and Rates

Third-party processors tend to have lower rates and fees than merchant account providers. However, they may not offer all of the same features and benefits. It’s important to compare both providers to see which one is the best fit for your business.

Merchant account providers usually charge a higher markup than third-party processors but some merchant account providers offer low rates. Additionally, keep in mind that not all merchant account providers offer the same services.

Some may have more features than others. So, it’s essential to do your research before you decide. And don’t forget to ask about the features each provider offers. You want to choose the provider with the services you need at a price you can afford.


When looking for a payment processing solution, it’s essential to consider all of your options. Merchant account providers offer more features than third-party processors. They can also provide emotional benefits like the ability to be your boss and build the business you’ve always dreamed of. Plus, serving your customers with an easy checkout process is a great way to build trust and loyalty.

On the other hand, third-party processors are often less expensive. They’re also easier to set up and might be more suitable for your business if you don’t need the high level of customization offered by merchant account providers.

Customer Service

It’s crucial to find a provider with excellent customer service because they’ll help you with any problems. You can read reviews of all top card processors from past customers to get an idea of what to expect.

Before you sign up, ask for a phone number and give it a call to check their responsiveness. If the providers take too long to answer or do not respond at all, then you should move on. It’s also helpful to look the potential providers up on social media platforms like Facebook and Twitter because you can see how they interact with their customers.

If there are a lot of complaints, then it’s probably not the best provider for you. And if you are not happy with the customer service you receive from your processor, you can always switch to a different one. Many options offer better rates and flexibility, so don’t be afraid to shop around.

Final Thoughts

Each option has its own set of benefits and drawbacks, so it’s essential to understand the differences before making a decision. But ultimately, it comes down to what best fits your needs and budget.