3rd Party Processor

Third party merchant account is most likely what you want if you are starting out or if your business is not turning over huge amounts of cash.  Basically, a 3rd Party Credit Card Processor is a company that can accept credit card payments for you or your business.  This means that you don’t need to set up an internet merchant account or find a gateway provider.

The number one advantage with using a 3rd Party Processor is that you only pay when you make a transaction rather than the numerous fixed costs involved with setting up an online merchant account.  In the last few years there has been a remarkable increase in competition which has kept pricing competitive and it is easier now to get a cost saving payment package than ever before.

Most 3rd party processors also provide you with a shopping cart function which may save you additional costs.  See the Guru Payment Calculator to see whether a merchant account + payment gateway or 3rd party processor is the best option for you.

3rd party processor diagram

1 – Your customer enters their credit card details on your online store.  Usually this is done through a shopping cart.
2 – The 3rd Party Processor’s payment gateway encrypts the data and processes it securely to your account.
3- The transaction is reviewed by the 3rd Party Processor, possibly in conjunction with other financial institutions to ensure the buyer has funds to purchase the good or service.
4- The 3rd Party Processor’s answer is encrypted again and sent back to your website.
5 – You then get the result and the order is filled or rejected
6 – Settlement occurs when the transaction has completed, which is often determined after the goods have been sent.
7-  3rd Party Processors will put the fund into your online account you hold with them.
8 – You can then transfer the funds from your 3rd Party Processor account to your bank account of choice.  Some 3rd Party Processors may automatically forward the funds to your bank account.
9 – Many 3rd Party Processors also allow you to transfer funds from your bank account or credit card to your online account with them.  This means you can purchase online without the need for a credit card.

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