For internet business owners, accepting credit cards is pretty much the only way to conduct business over the internet. The options are to go with a company like Paypal which has its drawbacks or to get a "real" credit card merchant account. Don't get me wrong, Paypal is a "real" merchant account in that you can accept any types of credit cards, but this is only after you sign up for their premium business service which ends up being more expensive than a typical merchant account.
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.
A non-qualified or mid-qualified rate will usually add on an additional .5% to 1.5% for these transactions that are "downgraded" because they are either a rewards card which cost more to process or a government or business credit card.
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.
When processing through a regular merchant account, you'll need a gateway in order to accept payments online. You may have heard of Authorize.Net which is one of the more popular gateways. Expect a setup of right around $100 or so for this. If you're getting this setup for much less than that, including free, watch for other fees because merchant account companies will make up for waiving this fee by charging you other fees including a higher monthly or possibly an annual fee. Just be cautious here because like anything, if it sounds too good to be true, it probably is.
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. - 16738
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.
A non-qualified or mid-qualified rate will usually add on an additional .5% to 1.5% for these transactions that are "downgraded" because they are either a rewards card which cost more to process or a government or business credit card.
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.
When processing through a regular merchant account, you'll need a gateway in order to accept payments online. You may have heard of Authorize.Net which is one of the more popular gateways. Expect a setup of right around $100 or so for this. If you're getting this setup for much less than that, including free, watch for other fees because merchant account companies will make up for waiving this fee by charging you other fees including a higher monthly or possibly an annual fee. Just be cautious here because like anything, if it sounds too good to be true, it probably is.
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. - 16738
About the Author:
Brian Armstrong is an internet merchant account executive. His focus is on helping internet business owners get setup with their credit card merchant account. This specialization in ecommerce merchant account setups is because Brian is also an internet business owner that knows what it's like to setup an internet business and run that business.
