Third Party Payment Services

2008-12-15 16:09:33

( Legal )



A Trend of Outsourced Services

As businesses find the need to operate with more cost effective set-ups, many of them have resorted to using third party providers of different types of services. These include third party shipping, accounting, employee recruitment and even software support.

With outsourcing, you eliminate the costs and problems, and instead pay a third party provider to do the work for you. And just in case your service agreement with the third party provider expires or if you had a falling out, you are flexible enough to switch to another provider.

Benefits of Third Party Payment Services

Among the most important part of your daily business operations is to collect and process payments from your customers. You can imagine just how tedious and time-consuming it is to process payments, especially if sales activities are brisk. The process of sending customers' checks for clearing or submitting sales drafts to card companies can take much time, so you lose out on the time value of money.

Besides being tedious, your existing payment processing set-up may not be suitable for online types of transactions. In offering online products and services, you need to give your customers a convenient way to remit payments. Requiring them to send checks or to use their credit or debit cards do cost time and money. Credit card companies also charge you for collection fees and commissions, so you don't achieve full profit from your product sales.

A third party payment provider acts on your behalf to collect and process payments that your customers have sent to you. Almost immediately, the third party payment provider can send you the money.

The third party payment provider keeps track of all the payments that customers have sent, and can also trace past payments as well as past due ones. It acts as a depository for all your bill collections. In turn you can also make arrangements with the third party payment provider to use the collected funds to pay for your own online purchases.

Risks in Using Third Party Payment Services

There are hackers who are able to access your site or intercept your clients' payments from the database of your third party payment provider and credit the funds to their own accounts. Or your customer might have been careless in keying in the important details, especially the amount and his own online payment account number.

Although your third party payment provider has installed security features, such as hiding or encrypting payment codes, nothing is actually foolproof in the hands of a very skilled online thief.

You should also calculate the total cost of maintaining a contract with a third party payment provider, and compare the arrangement against all other types of payment set-ups.


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