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.

Pricing merchant accounts starts with the discount rate. Everybody always asks for this rate when comparing merchant accounts. For internet based transactions, the discount rate will typically be about 2.1 to 2.5%. Paypal is a merchant account provider that charges a flat rate of about 3%. Even though this may seem to be easier to reconcile, it will ultimately cost most merchants more money simply because 80% or more of your transactions should go through at that lower qualified rate.

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.

Your more traditional merchant account has what are called "batch header fees" which is a daily processing fees. Transactions are batched together, usually daily. Each of these batches is assessed a $.25 batch header fee. So if you process batches every day for 30 days, you'd have about $8 or so worth of "batches" that you'd be paying for. This is one small advantage of Paypal merchant services is that they don't have this batch header fee. This is a fee that you should be able to negotiate with your service provider.

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.

Brian Armstrong is a professional merchant account executive. He's been setting up credit card merchant accounts since 2002 helping internet businesses just like yours accept credit cards. Brian specializes in ecommerce merchant account setup.

Ecommerce Solution writes: Whether you select to process credit card payments yourself or choose a third-party processing service like PayPal, Google Checkout. etc keep in mind that it may be beneficial to provide multiple ways of payment. For example, some customers may like to use Google Checkout, while others may not like to use Google Checkout.

21:02:59 Thu Dec 10 2009 CST


3rd party credit card writes: Merchant accounts are marketed to merchants by two basic methods: either directly by the processor or sponsoring bank, or by an authorized agent for the bank and additionally directly registered with both Visa and MasterCard.

7:18:14 Thu Nov 26 2009 CST


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1:55:28 Thu Nov 26 2009 CST


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