posted on July 31, 2001 11:18:08 AM
Anyone have any tips on walking into a local bank and applying for a merchant account to be able to take Visa/Mastercard over the phone? What to look for or stay away from?
I guess there will be the 3.x% cut plus .35 per transaction plus a $xx per month subscription plus equipment fees? I'm really in the dark on this and want to know something before going in to the wolves.
Thanks
Matt in MO
[ edited by mhull on Jul 31, 2001 11:19 AM ]
posted on July 31, 2001 09:59:01 PM
have you checked into propay.com? you can set up an account there and take credit cards over the phone or in person and enter the card number on their website for processing.
posted on August 1, 2001 05:19:35 AM
The bank people aren't as nefarious as you make them out to be. Just go in there and tell them you are a newbie and they will help you. They want your business.
I went into Bank of America and did just that and the lady spent half an hour telling me what I needed to do, which was set up a DBA and several other things.
It may help if you go in first and ask if they have any small business experts. Many times a neighborhood branch bank will only have one or two people there beyond tellers and clerks, and even they may not be very knowledgeable of small business needs.
I would think you can get a better rate by shopping around on the internet than by taking the first thing that a Big Bank would offer you. Costco, for instance, offers a solution that is 1.78% + 28[cents] if I recall correctly.
posted on August 1, 2001 06:09:28 AM
costco does not offer merchant account,some organisation affiliated with costco does,but you have to be an executive member of costco to qualify,check with costco,they will direct you to the proper party.
i talked to them a year ago and it was not cheap but then i heard they have revised their fee structure.
i also talked to my local banker ,they have someone who handles this type of service,besides DBA(doing business as),one must have a business checking account which means a fee of 15 dollars or 1500 minimum balance in your account.
i ended up with paymentech(which is sub of banc one) and they process yahoo shops transactions,they do not require a business checking account although they prefer it.
you can find out more about paymentech via yahoo shopping.
you can view your transactions after 24-48 hours after $$ has been deposited into your account via monetta service which is free,it shows a lot of info including chargebacks
posted on August 1, 2001 07:31:12 AM
If you already have a business relationship with a bank, that's a good place to start asking questions. If your account will be for ***internet sales*** make sure you mention that - some banks won't touch them at all, and those that do will charge you a higher discount fee than for brick and mortar retail. The rates you mention are probably a bit higher than average - most internet accounts have discount rates (the commission you pay the credit card companies) in the 2.2 - 2.7 range and you can probably get a per transaction fee of $.25. For most accounts there will be a minimum monthly requirement - if you don't generate fees of at least $25, for instance, they charge you that anyway.<p>
If your bank can't help, a good place to find information about many internet merchant account providers is http://www.merchantworkz.com. You can compare rates, services, etc.<p>
One thing to look carefully for in any merchant account contract is whether the fees quoted are locked in, or vary based on monthly volume of sales. All applications will ask you to estimate the amount of credit card sales (V/MC only)that you expect to do monthly. Some providers will charge you a higher rate if you **exceed** that amount; others up the rates if you fall below that amount. An extra 0.1 to 0.3% discount rate for a fixed fee account is worth it, IMHO. The other thing you want to look at carefully is the length of the contract - try to find an account that only locks you into a year at a time; many have two or three year terms.
If all your sales are internet, there's no need to buy or lease equipment. You can process online with Authorizenet or Verisign (both have websites where you can get details). One big advantage of this is that you can separate the "authorization" and "capture" functions - A or V gets the authorization of funds from the credit card issuer and sends it to you, then you decide whether you want to accept the charge by "capturing" the funds.
posted on August 1, 2001 09:23:01 AM
watch out for some services which may not be around.
it is better to stick with a established service say bank of america or bank one etc than one which could fold in the future.
internet sales is riskier as you dont see the buyer face to face,one factor to remember is that international charges may be authorised but it is not the end of the story- if the card is stolen,owner may not realise until later or protocal and efficiency vary among countries,your provider may not be willing to pick up the phone and call say turkey and talk to bank operator in turkish and ask to talk to credit card fraud dept.
so it is better to stay with established big companies which have experience dealing in international cases.
posted on August 1, 2001 12:20:42 PM
hwahwa - What is Paymentech's discount rate? I just spent several minutes on their site and couldn't find that information anywhere.
There's a fairly easy way to protect yourself from international fraud: have all first time international buyers fax you the front and back of the credit card. Most fraudsters don't actually have the card, just the number, and you'll never hear from them again after you tell them you need this before processing the order.
posted on August 1, 2001 02:51:51 PM
thanks for the overseas charge card fraud prevention idea.
paymentech charges 22.95 per month whether you use the service or not,this is a 6 months contract.
then there is a 20 cents transaction fee plus a discount rate which varies with the credit card used,call 1-888-807-5874.
there is a minimum charge of 15 dollars whether you have any transactions for the month or not.
when i open a shop on yahoo in may of this year,i was willing to lose money up to 6 months,but it turns out that i made a profit every month!!
posted on August 1, 2001 03:07:08 PM
question-
to have a merchant account,most banks will ask you to open a commercial checking account.
with my bank,there is a fee of 15 per month or you keep a balance of 1500 then that 15 is waived.
when it comes to chargebacks,would it be a sure thing for paypal or billpoint,there will always be money in your account for them to chargeback??
posted on August 1, 2001 06:43:39 PM
hwahwa- I'm not in the market for a new merchant account, just like to keep myself current on what's available; I do some consulting for startup e-commerce businesses. Have to say I'd never recommend a service to anyone that doesn't reveal its discount rates up front. I always advise my clients to go the standard merchant account route - much more protection for buyer AND seller. Plus, if you don't take yourself seriously as a business, how can you expect anyone else to (don't mean "you" here, just anyone)?
Paymentech rates sound pretty high to me - sounds like you're paying $38 a month + .20 per transaction, + whatever the discount fee is. By comparison, my bank merchant account charges me $21 a month as a minmum (no monthly maintenance fee)-and since our discount fees are always higher than that, we pay essentially nothing. Our discount rate is 1.97% for internet V/MC, 1.89% for Discover, and 2.45% for AMEX. Per transaction fee is .20, but we get .15 of that back every quarter that we don't have a chargeback. These rates are for a well established business doing about 220K a year in sales: I'm sure they'd be higher for a startup, but not horrendously. Since my bank no longer offers startup accounts, I can't do a direct comparison. Did you crunch the numbers to make sure it was cheaper for you than paying the $15 for a business checking account?
I can't answer the question about Paypal/Billpoint chargebacks since I've never used either one as a seller, but I don't believe either service treats sellers as true "merchants", so the requirement of having a business checking account wouldn't arise.
posted on August 1, 2001 09:24:38 PM
hi mcherry,
your rate sounds very good for internet sales,but then you said you are an established business with over 200,000 a year sales.
the fixed fee for using paymentech on yahoo with shopping cart is 22.95 plus 15 dollars if nothing is sold,which comes to 37.95.
but i do sell something,so it is 22.95 plus 20 cents per transaction plus discount rate which varies depending on what credit card my customer uses.
this is still cheaper than what my bank charges me and with my bank i do need a commercial checking account which is either 15 dollars a month or leave 1500 in the account.with paymentech i dont need a commercial checking account.
i used billpoint,paypal and paymentech ,i have not studied it,but somehow i think paypal is most expensive,despite the 1/2% charge billpoint made for wiretransfer.
i just applied for lower rate at paypal,if i can maintain 1000 sales with paypal i will get lower rate from paypal,which means i have to tell my ebay bidders to use paypal only which i am not sure i want to enforce that??
also if i have a merchant account with my local bank,i still need a shopping cart in my yahoo shop which means using first data service and there is a fee too.
using paymentech is simpler for me and they seem to receive preferential treatment from yahoo,just like billpoint is ebay's baby,paymentech is yahoo's baby!!
