Free Merchant Accounts: Understand the Truth
So-called free merchant account services tend to make merchants believe that they can boost their sales volume without having to spend hundreds of dollars on merchant account fees. As a merchant, you start believing that you don’t necessarily need an expensive merchant account when a third party company is willing to provide you with free merchant accounts. Many think that it will spare them the time and expense others face while setting up their online merchant accounts.
There has to be a catch
If something seems too good to be true, it usually is. Whenever we see ads for free merchant account solutions, the lowest rates, no set up fees, it elicits a question: How is the merchant account provider making money?
We’re also mindful of the old Columbia House Records and Tapes club in the late 1970s and 1980s, which advertised the sale of 12 albums of the consumer’s choice for a penny. Upon seeing such a deal, what teenager didn’t beg his/her parents to join? Mine resisted and resisted until they could take my begging no more. I would find out how good a deal it was.
And I did. As a naive teenager, I only saw the ’12 albums for a penny’ claim, and not the commitment it called for upon singing on – the purchase of 10 albums within the next 18 months (something like that) at Columbia’s inflated cost, not including shipping and handling.
We’ve found it is the same situation with providers that peddle free merchant accounts. There is always a hidden catch or condition, hidden for a reason. We feel if the provider feels they need to hide terms and conditions, it is reason enough to stay away.
What the Free Merchant Account Services boast!
Given below are some of the things that the free merchant account services tend to boast about:
- With free merchant account services you don’t need to pay for expensive processing software
- You can get a secure server
- Free merchant account services take no customer service fees, monthly gateway fees or minimum transaction fees
- With free merchant account services, there are no setup or monthly fees
- No credit check
- Some of 3rd party credit card processors can run an affiliate program for you
- You can start accepting online payments within minutes.
Again, we defer to our question above: How is the merchant account provider making money with such offers? Keep reading.
Free Merchant Accounts – there is a catch!
No one works for free.
- These companies make a profit by taking a percentage of your transactions.
- Not only that but the credit card processors tend to charge you slightly higher percentage points on free merchant account transactions in comparison to your own online merchant account.
- Also, many credit card processors are apt to temporarily holding around 10% of your profits to use them against future returns.
- Initially, you are also expected to pay more bucks per sale.
- And once your business requires high volume sales, such free merchant accounts will not be able to support you and you will be expected to invest in your own real online merchant account.