subject: Third Party Credit Card Processors Could Deliver Better Rates Than Banks [print this page] Traditionally banks have played a leading role in credit card processing. Speculating the reason for this is not difficult. Banks are where merchants have had accounts usually for years and it was relatively easy to sell credit card processing to existing account holders. Even point of sale terminals could be effortlessly linked with merchant accounts and the bank could get a percentage for moving that money thus setting up an additional revenue stream for themselves .
In recent years however, banks have been losing their preeminence to third party credit card processing companies. This is not accidental. Attractive pricing supported by solid technology has helped the third party credit card processing companies make sizeable inroads into the industry.
Banks were under the assumption for a long time that since the merchant account was held by them, were entitled to sell every other service connected with merchant funds. They did not recognize that the customer is always shopping.
It is inappropriate to assume that customer prefers a one stop shop for financial services. What they do crave is that their needs be met in the most effective and inexpensive manner. It does not really matter if they have to source from multiple vendors so far the rate and service is fantastic. It is here that the third party credit card processing companies scored over banks. They had a strong business proposition of bettering the banks' offering at a lower price.
This business proposition was profoundly facilitated by the arrival of the internet. It altered all norms of the business world. Thanks to inexpensive and quality connectivity provided by internet, third party credit card processing companies are able to process credit cards correctly and inexpensively . Servicing even smaller merchants became viable without charging them excessive rates. While such service was earlier made available only by the banks, now numerous technically savvy outfits which provide if not more but equal value have come up to service the merchants.
We cannot argue that all financial services at a single point is comfortable getting. It saves a lot of time and effort otherwise spent in integration. But it is essential to meticulously consider the costs too. Businesses would be keen on enhancing their relationship with the bank especially if they have had their accounts with them for years. But they would want to get a good deal as well. It is crucial to underscore the other key service areas as well in addition to rates and charges: internet processing, no signature processing etc.
The third party credit card processing companies are playing a vital role. They help businesses do better when they negotiate with their bankers. Banks are no longer complacent due to the vigorous competition and are shifting their modus operandi to take the new competitors head on. Ultimate winner is the consumer - the business, irrespective of who they choose to partner with, they are assured the very best deal.
