In a nutshell, a merchant account enables you to begin accepting
credit card payments over the Internet. It's a "liaison"
account linking your customer's credit card account with your own
business account. Sounds simple, right? So what's the first critical
error many online business people make? They assume that all merchant
accounts are alike.
First, competitive rates and reasonable fees are important, so
do some rate comparison. We suggest you start by talking with your
bank, and see what they offer in merchant accounts that work on-line.
Here's what you have to look at:
- Transaction Fees: A transaction fee is a fixed charge
for every online transaction performed online. If you are selling
a small number of high-end, high-margin products, the transaction
fee is going to be basically irrelevant. However, if you're selling
books or CD's or similar low- margin products, a high transaction
fee has the potential to take a sizable chunk out of your profit
-- so beware.
- Discount Rates: A discount rate will be a percentage
charged to you for every online sale you transact. Remember that,
by itself, a low discount rate means nothing. Look at a merchant
account's entire rate and fee schedule, as well as other service
- Chargeback Rates: Chargebacks stem from returned or repudiated
(i.e., disputed and overturned) purchases. Chargeback rates are
implemented to protect the merchant account provider in the case
of returned merchandise or repudiated transactions. Your chargeback
rate will take a percentage of your total monthly sales -- and the
specific percentage is determined by what kind of product or service
you sell, as well as your chargeback history.
- Chargeback Fees: Some merchant account providers will
charge you a fee (beyond your chargeback rate) for every chargeback
you incur. If your business typically receives a disproportionately
high amount of chargebacks, chargeback fees -- compiled with a chargeback
rate -- can hit hard.
When researching a prospective merchant account provider, you need
to evaluate the full rate spectrum in relation to your business model,
the amount of business you expect to transact, your per transaction
profit margin and the category of goods or services you sell. In effect,
make sure that your merchant provider does not subject you to a one-size-fits-all
approach: There are critical differences between small owner-operated
businesses and monolithic corporations.
By now it should be clear that an e-business selling a few luxury
items will have different merchant account needs than a business relying
on high-volume low-margin merchandise.
Though significant, rates and fees are still just the tip of the
iceberg. You need to balance price with the best overall fit for your
company. Here are critical factors to evaluate:
- Chargebacks: Do a meticulous analysis of the chargeback
policy and find out where you merchant account provider stands.
Chargebacks are becoming an increasingly touchy issue with credit
card companies and merchants alike, and the dynamics of card-not-present
transactions have pushed merchant account providers to 'deduct'
an increasingly high percentage of transaction proceeds. So evaluate
- Customer Service: Communication is critical. Make sure
your merchant account provider has the customer care platform to
swiftly and reliably answer questions and resolve problems. Integrity
is important -- and the flight-by-night providers don't like to
answer the phone.
- Online Experience: Make sure your prospective merchant
account provider has extensive experience working with a wide spectrum
of different of business models, both Internet startups and "brick
and click" enterprises.
Remember, rates and fees are simply a part of the big picture. Getting
a wider perspective on initially intangible items like sensible policies
and superior customer service is essential in choosing the best provider
for your unique business needs. Look for the details that distinguish
one provider from next. First-step decisions like choosing a merchant
account provider need to be among your most intelligent strategic
We suggest you use the following link to get started with this very
reasonable merchant account. If you plan on using Actinic be sure
to select Authorise.net as you gateway. There will be a one time fee
of $299 and reasonable monthly fees. Please have the following information
- Business Contact Information (addresses, phone and fax numbers,
email addresses, web site URL)
- Federal Tax ID# or Social Security # (for sole proprietor)
- Company Ownership Information
- Bank Reference and Routing Information
- Current Credit Card Processor Information (if you have one)