A number of business owners who are just starting their operations do not want to open their own small business merchant accounts. It involves a certain commitment and there are fixed credit card processing fees that you pay every month, whether you have used the service or not. Some find it easier and more appealing to use a third party electronic payment processing solution, like PayPal or 2Checkout. Signing up with such payment acceptance providers usually involves no long-term commitments and there are no monthly service costs. Yet, such solutions are not as convenient and as cost effective as a regular merchant account. Moreover, they offer much less control over your processing activity and are much more susceptible to suspensions and delayed funding. In any case, as your business expands and your revenues grow, eventually you will reach the point where your processing volumes have grown large enough to make it cheaper to use a merchant account.

At this stage you may find it more convenient to use someone else’s account. That way you will be able to accept credit cards at the low processing rate, associated with a full-fledged merchant account and without having to pay the fixed monthly costs. Well, unfortunately this practice is runs against the regulations set forth by the Credit Card Associations and a merchant who is found to have let others use his or her merchant account service, will lose it and will never again be able to establish a processing account. The reason why Visa and MasterCard have enacted this rule is that they need to have control over who accepts credit card payments and, if there is an issue, they need to know who to contact about it. Moreover, if a merchant allows the use of his or her processing service by someone who commits a fraud, he or she may be liable and suffer the consequences. A higher level of chargebacks, generated by the unauthorized user, may also lead to suspension of your credit card transaction processing account.