Stripe vs Merchant Account? The one choice that could make or break your online sales

The choice of payment processing solution is one of the most important decisions for every online business. The difference between Stripe vs Merchant Account goes far beyond just the fees; the choices you make today will determine the way you will receive your money, scale your business, and maintain your operations over time. Choosing incorrectly could delay your growth or even stop your sales altogether.

Explaining Stripe as a Payment Processor

Stripe is a well-known third-party payment processor that is popular for its easy-to-set-up, easy-to-use, developer-friendly tools. With Stripe, businesses can begin accepting payments in a matter of minutes, without having to set up an individual merchant account. In addition, Stripe manages all of the compliance, security, and payment processing of payments through one central processing hub.

While this benefit provides a great deal of convenience for merchants, it also has certain limitations. In Stripe's "shared merchant model" approach, a business is actually utilizing Stripe's primary processing account. This means, for example, that if the business operates in an industry that has been classified as a "high-risk" industry or if the business experiences too much chargeback activity, Stripe can put a hold on the funds being processed for that business and/or terminate the account of that business without warning. This risk can be extremely costly for growing or high-volume businesses.

Understanding Merchant Accounts

A merchant account is a special account that is used exclusively for processing payments for a business through an authorized bank or a financial institution called an acquiring bank. The major difference between a merchant account and other payment processors (such as Stripe) is that the business owns its own merchant account and has much more control, reliability, and the ability to customize the account.

Merchant accounts can have a profoundly positive impact on businesses that process a large volume of transactions per month, engage in recurring billing, or conduct international sales. Merchant accounts also enable merchants to create a custom risk management plan, negotiate their own rates, and typically have higher approval rates for merchants in more complex or high-risk industries.

The Distinct Difference Between Payment Processors and Merchant Accounts Affects Online Sales

The primary difference between Stripe and a Merchant Account is in who owns and controls the account. Stripe is easy to use for startups and low-risk businesses that want fast setup and easy processing. A Merchant Account is better suited for long-term success; set up can take a long time,r but the most important benefit of a Merchant Account is that it will have less disruption as you grow your business.

Owner-operators have higher processing limits, are typically charged lower rates when their business is larger, and have less risk of sudden termination from the account due to the volume of sales processed.

Which Option Is Right For Your Business?

Stripe is likely a good option to start for small businesses and those that are testing new products; however, if your company is growing rapidly or works within a high-risk industry, or processes a large volume of transactions, then it would be wise to establish a dedicated Merchant Account.

Conclusion

The payment processing system you choose now could either help or hinder your online sales over time. Choose Trinity Consutlings while convenience today might be appealing, it’s important to consider how much more stable and profitable your business will become in the future if you make the right choice. Choosing the best Payment Processing System will provide you with a critical source of continuous cash flow for your business in the future.