Everybody’s faced with choices in life such as the daily decisions of what to have for dinner, what to wear or what CD to listen to on the way to work, etc. And then there are the more important options we have to deal with, which include marriage, banking, insurance, and housing etc.
If you’re an online merchant there’s usually another important decision to make and that’s which Internet merchant account to select. This is an important choice as you need to balance the cost with good service and dependability. Let’s face it, you’re not in business to lose money, but you also need to sleep at night knowing your merchant account provider is somebody you can depend upon.
If you have a hard time deciding what socks to put on in the morning, then you’re going to be blown away when you see how many Internet merchant account providers are out there competing for your business.
While accepting credit card payments via your web-based business doesn’t seem too difficult, you still need to understand the process so you can make an educated choice when choosing a provider.
There are three general components to the process
Payment Gateway: This code transmits customer’s orders back and forth to an Internet merchant account provider. It allows you to take all of their credit card billing information and the amount of payment. It also validates the transaction before the credit card is charged.
Because Internet credit card fraud is quite common these days you need to make sure the Internet merchant account provider has the proper security measures in place to combat it.
Internet Merchant Account: This is a deal you make with a financial institution or bank. It allows you to take credit card payments for goods and services from customers. The payment gateway sends all of the pertinent billing details to the Internet merchant account provider and they handle the transaction
Shopping cart: This is a crucial component for an online store and facilitates the e-commerce process. When examining shopping carts, one should look for the feature set, ease of use, including ease of implementation, its appearance, fee structure, etc.
It is important to note that the payment gateway must be compatible with the shopping cart.Authorize.net, for example, is a popular payment gateway that is compatible with the vast majority of shopping carts.
Now that you are aware of the pieces surrounding the implementation of an online account, it is important to decide on the vendor. Of course one of the top things to consider when seeking an account provider is the price, so make sure you understand all of the costs and don’t be afraid to ask questions until you are fully aware of what you’re getting into
Most online merchant account providers have these fees
- Up Front Application Fees
- On Going Fixed Fee
- Discount Rate
- Fixed Transaction Fee
- Cancellation Fees
- Miscellaneous Fees
Many providers will ask for some up-front money to cover the costs of processing your application. However, try to find a company that doesn’t require any up front cash if possible.
The ongoing fixed fee is generally a monthly statement fee to cover the provider’s costs of doing business with you. It’s a common practice, but shop around and compare fees as $10 should be the standard statement fee. A monthly payment gateway fee will also likely be assessed ($10-$15 per month) and you may also be paying a monthly minimum on top of it..
The discount rate charged is usually between two and four per cent. This is basically a sales commission that the Online merchant account provider charges for each sales transaction. The lower the discount rate, the better for you, as it means you owe the provider less money.
A fixed transaction fee is generally between 20 and 30 cents for each sale. This means you pay that rate no matter how much the transaction is worth.
Make sure you understand the provider’s cancellation fee as it may be in the small print of the contract. This is something you have to pay if you stop doing business with your Internet merchant account provider within a set period of time. It’s a good idea to not commit to a long-term contract until you’re satisfied the company can meet your needs.
Miscellaneous fees may be charged for items such as batching, address verification, authorization, debit pin pad fees, etc. You should also be aware of the chargeback and/or retrieval request fees should any customer dispute a charge. If you see fees listed in the contact and don’t understand them make sure you ask for clarification before committing to anything.
Once you get the hang of the fees charged you’ll have a better idea of how much it’s going to cost on a monthly and ongoing basis, depending on your sales. Just remember they will all be included in the total cost. Of course the bonus is the more transaction fees you pay means the more goods and services you’re selling to customers. However, you want to keep the percentage of total sales owing to the provider as low as possible.
The main thing to remember when choosing an Internet merchant account provider is to get value for your money, so factor in customer service, reliability, professionalism, and flexibility. It doesn’t matter how inexpensive the provider is if they can’t offer you what you need to run a successful business.