Accepting credit cards is the only easy way to collect payments online. The alternatives are to have someone print something and mail you a check or something like egold which really isn't a solid solution nor is it convenient. Anything but credit cards online will cause you to lose sales. It's a convenient way to accept payments and one that you can get without a major hassle.
The discount rate is typically what every merchant asks about when calling me for quotes. Although this is important, I can mark this down very low and still have merchants paying just as many fees as other providers. I guess what I'm trying to say is that don't overlook other fees when faced with an "awesome" discount rate. Expect to pay around 2.1 to 2.5% for your qualified rate. Competitive rates are usually anything below 2.25%. Paypal doesn't have a "qualified" rate as much as they just charge a flat rate of 3% which is on the high side. Paypal does a fantastic job of making things very simple and easy to manage. They're higher priced on some things, but their simplicity makes up for some of the higher price.
Traditional merchant accounts have other pricing categories for their discount rates. These are the mid qualified and non-qualified rates. Although the majority of all transactions go through at the qualified rate, the mid and non still have their place when pricing accounts. The mid-qualified rates are typically the rewards cards or other credit cards with some cash back or other incentive associated with them. The non-qualified cards are government or corporate credit cards or in some other way are deemed "risky" such as when the funds aren't captured until 48 hours or later after the funds were first authorized.
Each transaction also has a cost, no matter how much the volume of the transaction. Makes me laugh sometimes when I buy a $.49 refill at the local convenience store on my credit card because I know that they're paying at least $.15 to $.18 per transaction if not a bit more which on a $.49 gross volume transaction, they're probably losing money. No wonder they sometimes just smile and tell me it's on them. Most internet based transactions run about $.20 to $.30 which is competitive when you compare to Paypal at about $.30 per transaction. Watch for AVS or the gateway transactions as they can easily get their advertised per transaction cost up there.
Unlike Paypal, traditional merchant accounts have a batch header fee. This is basically a daily processing fee. For every day of the month you process transactions, whether it is one transaction or 100 transactions, you'll have a batch header fee. This is usually negotiable, but something that most merchant service providers don't talk too much about. A lot of pricing is on a "don't ask, don't tell" meaning if the merchant doesn't ask, the merchant sales person doesn't tell. Don't get me wrong, the pricing is all over the application, but unless the merchant asks, certain assumptions are made which may cost as much as a couple hundred dollars per year. When in doubt, ask what each fee is and when it will apply so that you aren't caught off guard.
Monthly fees include an account maintenance fee or statement fee. Often called something like a customer service fee, etc. These fees are usually only one monthly fee of $5 to $10 or so. If at all possible, work with your merchant service provider to waive the monthly minimum. This monthly minimum fee is usually about $25 or so and if you're not processing transactions, will be very expensive. Even though not processing usually means you'll be going out of business soon anyway, paying an extra $25 worth of minimum every month is often more hassle and pain than it's worth, especially when you can get this fee waived most of the time.
Processing transactions through the internet also implies that you'll have additional fees involved. This is usually through what's called a gateway which is a company or software that will facilitate getting the transaction information from your customer to the bank for processing and is done online. Authorize.net is probably one of the more popular gateways that you've heard of. There are a lot more, but only a handful that are compatible with just about every shopping cart solution out there. If you do decide on Authorize.net, plan on a setup fee of about $100 or so. There are plenty of companies that give this setup away for free, but most of them also charge more on the monthly or will charge you the equivalent in an annual fee.
Getting setup with an internet credit card merchant account isn't too difficult and should be considered vital to any internet or ecommerce project. This can be done usually about 1-2 weeks before going live which will give you plenty of time to get your account approved (usually 2-3 days at most) and another week or so of testing. You should be able to get this setup without many problems at all. - 15478
The discount rate is typically what every merchant asks about when calling me for quotes. Although this is important, I can mark this down very low and still have merchants paying just as many fees as other providers. I guess what I'm trying to say is that don't overlook other fees when faced with an "awesome" discount rate. Expect to pay around 2.1 to 2.5% for your qualified rate. Competitive rates are usually anything below 2.25%. Paypal doesn't have a "qualified" rate as much as they just charge a flat rate of 3% which is on the high side. Paypal does a fantastic job of making things very simple and easy to manage. They're higher priced on some things, but their simplicity makes up for some of the higher price.
Traditional merchant accounts have other pricing categories for their discount rates. These are the mid qualified and non-qualified rates. Although the majority of all transactions go through at the qualified rate, the mid and non still have their place when pricing accounts. The mid-qualified rates are typically the rewards cards or other credit cards with some cash back or other incentive associated with them. The non-qualified cards are government or corporate credit cards or in some other way are deemed "risky" such as when the funds aren't captured until 48 hours or later after the funds were first authorized.
Each transaction also has a cost, no matter how much the volume of the transaction. Makes me laugh sometimes when I buy a $.49 refill at the local convenience store on my credit card because I know that they're paying at least $.15 to $.18 per transaction if not a bit more which on a $.49 gross volume transaction, they're probably losing money. No wonder they sometimes just smile and tell me it's on them. Most internet based transactions run about $.20 to $.30 which is competitive when you compare to Paypal at about $.30 per transaction. Watch for AVS or the gateway transactions as they can easily get their advertised per transaction cost up there.
Unlike Paypal, traditional merchant accounts have a batch header fee. This is basically a daily processing fee. For every day of the month you process transactions, whether it is one transaction or 100 transactions, you'll have a batch header fee. This is usually negotiable, but something that most merchant service providers don't talk too much about. A lot of pricing is on a "don't ask, don't tell" meaning if the merchant doesn't ask, the merchant sales person doesn't tell. Don't get me wrong, the pricing is all over the application, but unless the merchant asks, certain assumptions are made which may cost as much as a couple hundred dollars per year. When in doubt, ask what each fee is and when it will apply so that you aren't caught off guard.
Monthly fees include an account maintenance fee or statement fee. Often called something like a customer service fee, etc. These fees are usually only one monthly fee of $5 to $10 or so. If at all possible, work with your merchant service provider to waive the monthly minimum. This monthly minimum fee is usually about $25 or so and if you're not processing transactions, will be very expensive. Even though not processing usually means you'll be going out of business soon anyway, paying an extra $25 worth of minimum every month is often more hassle and pain than it's worth, especially when you can get this fee waived most of the time.
Processing transactions through the internet also implies that you'll have additional fees involved. This is usually through what's called a gateway which is a company or software that will facilitate getting the transaction information from your customer to the bank for processing and is done online. Authorize.net is probably one of the more popular gateways that you've heard of. There are a lot more, but only a handful that are compatible with just about every shopping cart solution out there. If you do decide on Authorize.net, plan on a setup fee of about $100 or so. There are plenty of companies that give this setup away for free, but most of them also charge more on the monthly or will charge you the equivalent in an annual fee.
Getting setup with an internet credit card merchant account isn't too difficult and should be considered vital to any internet or ecommerce project. This can be done usually about 1-2 weeks before going live which will give you plenty of time to get your account approved (usually 2-3 days at most) and another week or so of testing. You should be able to get this setup without many problems at all. - 15478
About the Author:
Brian Armstrong has been setting up ecommerce merchant accounts since 2002. His focus is in not only helping internet businesses get setup with their credit card merchant accounts, but also helping internet business owners after their account has been setup to process more transactions by getting more traffic to their websites and converting that traffic into sales.
