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.
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.
Batch header fees would probably considered by most merchants one of those "hidden" fees. This is a fee that most merchant don't ask about and unless they look closely, don't know about and never question. These batch header fees may be as much as $100 per year or so depending on how often the merchant processes credit cards. What happens is that transactions are batched together usually daily and submitted. Each one of these batches are assessed a batch header fee of about $.25. So, for an easy way to calculate this, if you process transactions every day, you'll be paying $.25 per day. So, even on your busiest month, this fee wouldn't exceed $8 per month.
Monthly fees for a traditional merchant account are usually around $20 or less. For a statement fee or account maintenance fee expect to pay about $10 and for an internet gateway, such as Authorize.Net, you'll probably be paying an extra $10 as well. Work with your merchant account provider to waive the monthly minimum, especially if you're an internet business processing less than $1000 per month in gross volume.
If you're processing over the internet with a traditional account, you'll need a gateway. Authorize.Net is one of the more popular gateways and although some providers give this away for free, they have costs associated with this and will usually hit you with an annual fee or some other fees along the way to make up for this. Try to negotiate your monthly rates so that they are lower even if you end up paying a little more for the setup. Authorize.Net shouldn't cost more than about $100 to setup. I'd recommend against leasing as you'd end up paying 5 times as much for the setup over the 48 month lease you'd be stuck with.
Credit card merchant accounts are worth having and with an internet based business pretty much your only real option. There may be a few other ways to get around having to get a credit card merchant account, but not without the expense of losing customers and sales. Make it easy on your customers and yourself by getting setup with an internet merchant account. This can be done easily and without a major hassle. Just follow the above guidelines for pricing and you'll be fine. Check each contract before you commit. Plan on getting setup about 1-2 weeks before you need to go live. This will give you 2-3 days to get approved and a week or so of testing before you go live. - 16069
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.
Batch header fees would probably considered by most merchants one of those "hidden" fees. This is a fee that most merchant don't ask about and unless they look closely, don't know about and never question. These batch header fees may be as much as $100 per year or so depending on how often the merchant processes credit cards. What happens is that transactions are batched together usually daily and submitted. Each one of these batches are assessed a batch header fee of about $.25. So, for an easy way to calculate this, if you process transactions every day, you'll be paying $.25 per day. So, even on your busiest month, this fee wouldn't exceed $8 per month.
Monthly fees for a traditional merchant account are usually around $20 or less. For a statement fee or account maintenance fee expect to pay about $10 and for an internet gateway, such as Authorize.Net, you'll probably be paying an extra $10 as well. Work with your merchant account provider to waive the monthly minimum, especially if you're an internet business processing less than $1000 per month in gross volume.
If you're processing over the internet with a traditional account, you'll need a gateway. Authorize.Net is one of the more popular gateways and although some providers give this away for free, they have costs associated with this and will usually hit you with an annual fee or some other fees along the way to make up for this. Try to negotiate your monthly rates so that they are lower even if you end up paying a little more for the setup. Authorize.Net shouldn't cost more than about $100 to setup. I'd recommend against leasing as you'd end up paying 5 times as much for the setup over the 48 month lease you'd be stuck with.
Credit card merchant accounts are worth having and with an internet based business pretty much your only real option. There may be a few other ways to get around having to get a credit card merchant account, but not without the expense of losing customers and sales. Make it easy on your customers and yourself by getting setup with an internet merchant account. This can be done easily and without a major hassle. Just follow the above guidelines for pricing and you'll be fine. Check each contract before you commit. Plan on getting setup about 1-2 weeks before you need to go live. This will give you 2-3 days to get approved and a week or so of testing before you go live. - 16069
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.
