Free merchant accounts is an odd term. When we speak of free in this sense we mean free of set up cost, application fees and monthly minimums, statement fees. However, nothing is really free and the only way a “free merchant account” can make money is because they will most likely charge a higher transaction fee and a higher discount rate. If you need a free merchant account you may be willing to pay these higher merchant account fees but if you can possibly get a regular merchant account it may be best if you are doing higher volumes of sales. You just don’t want to miss out on so much of your profit.
Some of the things that you may experience with free merchant accounts are: limited shopping cart integration, limited services, higher merchant account fees, may require more bookkeeping and effort on your part, and limited website integration.
Some of the great features of free merchant accounts are: they are FREE and free is good, no contracts, no set up fees, no minimum charges needed, online reporting and tracking, some may offer fraud and charge back protection, some may offer a savings account or money market account where the funds are transferred automatically to.
You really need to assess the needs of your business, customers and your website. See what works best for you and shop around. Sometimes it comes down to how much money you have to get started and how great your credit is. Different companies have different measuring sticks for approval.
PayPal merchant accounts can be free if you are willing to choose the limited services. However, PayPal is a great company. The other company that offers these services is Google Checkout.