The Types of Mobile Processing Providers

Mobile Payment Acceptance allows a merchant to take payments “on-the-go”! But it is more important than ever to understand the difference between the two types of mobile processing providers. Below we will explain the difference between the two along with the pros and cons of each.

Standard Mobile Processing Provider (More freedom and security, but more complex)

These processors set up a standard merchant account, opened for your business, with the same capabilities of other types of merchant accounts. These standard providers can offer a tiered pricing, interchange-plus pricing or negotiate rates.

Pros:

• Account stability – normal payment schedule with no holds.
• Ability to process larger transactions and larger weekly volumes.
• Potentially lower rates.
• Able to negotiate rates.
• Possible to use interchange-plus pricing.
• Ability to use a virtual terminal for computer-based processing.

Cons:

• Higher setup and maintenance costs.
• May have more incidental fees like PCI compliance.
• May have an early termination fee.
• May require you to purchase a card reader.
• May require separate payment gateway.
• You must be approved for an account.

Mobile Processing Aggregators (Less freedom and security, but greater simplicity)

These providers like Square and PayPal, don’t set you up with your own merchant account. Instead, they provide a stand-alone mobile service, usually with a pay-as-you-go pricing structure. They basically pool a whole bunch of merchants together into one big account, with each merchant tracked individually within this aggregation. To qualify to perform this service, a PSP and their acquirer must meet several different standards and follow a variety of rules set by the credit card networks, since these types of accounts are extremely susceptible to fraud (very high risk).

Pros:

• Instant Set Up.
• Lower setup and maintenance costs.
• Never carries an early termination fee.
• Usually comes with free card reader.
• Fewer incidental fees.
• Streamlined service.

Cons:

• Potentially higher rates.
• Usually not able to negotiate rates.
• Can’t use interchange-plus pricing.
• Lower weekly and annual processing limits.
• No access to a virtual terminal for computer-based processing.
• More likely to experience account holds and sudden terminations.

For low volume, sporadic processing with no real concern of chargebacks, set up an aggregator-style provider like Square or PayPal. For all those who process higher volumes of payments or higher average transactions, or would like to minimize holds, chargebacks or cancellations and have more account control, consider a standard provider like Merchant Processing Solutions Inc.
Information from Merchant Maverick