The Difference Between US and European Merchant Accounts

The U.S.A. has long been the center for e-Commerce merchant internet credit card processing. American banks were the first ones to issue credit cards and credit card processing services for big stores and supermarkets. And when online shopping became popular US credit card processing banks began to provide e-Commerce merchant services for all major online resources selling either goods or services. Today a very large number of US banks offer e-Commerce merchant accounts, credit card processing gateways and other CNP (card not present) transaction services. Due to the massive amount of banks the prices became competitive, going lower and lower. The highly competitive prices resulted in very harsh terms and regulations, which not all e-Commerce merchants, especially starters, could work with; or, rather, these terms couldn’t accept such starting e-Commerce merchants. Monthly minimums, high risk of chargebacks and returns, etc. had a very negative effect on many online merchants. Moreover, most international, i.e. non-US residents, could not get a merchant account because of their residency statuses.

Most international and US e-Commerce merchants who could not get their business to generate enough revenue and incomes to get an e-Commerce merchant account with a credit card transaction gateway, had to turn to other CNP processing and transaction services, like third-party e-Commerce merchant accounts, spend a fortune on more accessible but much more expensive bank services, and use other payment methods, which are not at all convenient.

Things changed when European e-Commerce merchant accounts became available. E-Commerce merchants did not need to be citizens of the U.S.A to acquire a credit card processing gateway. More importantly, the world of e-Commerce credit card processing became open to the rest of the world, avoiding the harsh terms of US banks offering local e-Commerce merchant accounts. Today, all e-Commerce merchants have a choice of either getting a US merchant account or a European one. This question cannot be tackled from only one side; an independent view is vital when approaching the question.

The difference between US and European merchant accounts:

Availability: US e-Commerce merchant accounts are very difficult to sign up for. There are freely available credit card processing solutions available online for US and non-US e-Commerce merchants, but these services are very expensive. US banks tend to do a lot of checking up and research before providing merchants with a gateway. The merchant’s business should maintain a certain volume of sales and a minimum number of transactions per month. Plus, most US banks do not provide credit card processing gateways and services to international online merchants. European e-Commerce merchant accounts have much more flexible terms and regulations and are ready to work with most e-Commerce merchants from any country in the world. It does not mean that European providing banks provide gateways and merchant account to any and all merchants; some limitation and checking up is always done for security and other reasons. Also, terminated merchants (TMF e-Commerce merchants) in the US can easily get an EU account without worrying about his/her credit card processing history in the US.

Prices: Sometimes the only thing that and e-Commerce merchant looks at are the costs involved: gateway setup fees, discount rates, additional charges, etc. The variation in prices between US eCommerce merchant accounts and European accounts is perceivable. US merchant accounts are usually cheaper than European accounts because US accounts are in constant competition, as said above, among all the banks. If a few banks offer their credit card processing services at lower rates than the rest, the rest will, most probably, lower the prices to stay in competition. European banks have slightly higher prices as there is no ‘US-style’ competition, EU banks keep their cool and service the whole world, while US banks, usually, cover the U.S.A. only. The ‘US banks are cheaper than EU banks’ phrase is not a rule, there are many EU banks which render services at lower prices than an average US bank’s ones.

Quality: In terms of quality there is no difference, as there are as many great US credit card service providing banks as European banks. Scams can pop up from anywhere in the world, US or Europe. Quality is of no lack on both sides as long as the merchant account banks, or providers, are decent, responsible and respected. All the quality factors, i.e. time of approval, safety, security and stability vary from one European bank (or provider) to another, as much as from one US bank (or provider) to another. Generally speaking, any credit card processing service uses identical gateway security technologies (including additional ones from Visa or MasterCard), all are as fast as any e-mail being sent from one part of the world to another. Time of approval depends on the business to be serviced and the merchant account provider. Nonetheless, the time of approval at US providers is similar to that of European providers.

The advantages of European banks are evident: internationally available and easily acquirable. Many US e-Commerce merchants use European services because it is really rather hard to get a local (US) credit card processing service. European merchant accounts can also be called international e-Commerce merchant accounts, because any country can apply for these. Some US based providers, nevertheless, provide international merchant accounts for merchants located in any part of the world, but these are few and, usually, are expensive. Your choice between European providers and US providers must be based on the type of business you are running, the terms you can work with and the expenses you are ready to cover.

Tip: Another great use for European providers is high-risk business processing. European providers tend to have high-risk rates, lower than US banks, and European bank chargeback regulations are not as tough as US regulations, where an e-Commerce merchant can easily get ‘blackbooked’ (TMF status, standing for ‘terminated merchant file’).

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