posted on August 23, 2001 07:25:29 AM
I am interested in hearing from anyone who accepts credit cards directly on-line rather than through a third party service. What are the initial set up costs/security deposits and per transaction costs. How do they stack up to Paypal, Billpoint etc. ?
Is the administration and bookkeeping a pain or easy. Are chargebacks or fraud for which you as a merchant are responsible common or uncommon? Any information would be greatly appreciated.
posted on August 23, 2001 09:52:18 AM
If you're selling only online, you'd set up an internet merchant account. Average discount rate (the percentage you pay the credit card processor) are in the 2.2 to 2.9% range generally, with 30 cents being the average for per transaction fees. Many, but not all, merchant account providers charge a setup fee to set up the account - $150 is about average. Most also have a monthly minimum, which you pay even if you don't generate that much in discount fees; the minumum average is $15-25. There's no need to buy or lease equipment for online processing.
Generally, you'll need to provide dba (doing business as) information if you're selling under a company name different from your own. You need to provide a state re-seller ID number, and have a business checking account; some providers will require you to keep a minimum amount in the checking account, others will require that uou maintain a reserve fund with the processor. If you're a new business, you'll go through a personal credit check; if you've been in business for at least 2 years, the credit check will be run on the business. THE LOWER THE DISCOUNT RATE YOU APPLY FOR, THE MORE DETAILED THE APPROVAL PROCESS.
As a merchant account holder, you are involved from the beginning in any chargeback dispute, because **you** are the merchant (Paypal or Billpoint is the merchant of record in those transactions). You can present documentation in your own defense, write a letter detailing the transaction, even talk to the cardissuers' representative by phone if you want to. And while there's no guarantee that you'll be able to win every dispute, you will have control over presenting your own side of the story. We do close to a quarter million dollars a year in sales, and we've lost one chargeback (out of 14 attempted) in three years.
Some things to look out for in shopping for a merchant account: Don't use a "broker", who shops around for you to find an account; you'll pay an additional percentage to cover their commission. Compare at least 3 different merchant account contracts before signing one. Read any merchant account contract carefully to make sure the discount rate is fixed; some providers will charge you a higher fee if you go OVER the amount of credit card charges per month that you estimated in the application. Others charge a higher fee if you go UNDER that amount. If you're a new business, you probably won't be able to get an account directly with a primary bank; but even working with an "acquiring bank" processor, there's a lot of variation in fees and services.
I've posted this link here before, for anyone interested in comparing internet merchant accounts: http://www.merchantworkz.com.
posted on August 23, 2001 10:45:39 AM
I've used Discover Business Services at our shop for years. They have a website (link below), and although I've not investigated on-line processing per se, it looks like they offer it. They send only one summary a month (which is much better than when I used to get reports every darn day!) unless you have an "exception" in which case they notify you immediately. Their customer service has been good, and I've not found any other less expensive processing rate.
PS: The deposits are extremely reliable. The money shows up in my bank account 2 days after the charge was made. I've never had a charge-back, so no experience with those, but you are dealing with the specific card company (Visa, MC, etc.) at that point anyway.
posted on August 23, 2001 12:05:27 PM
Thank you all very much. More information here than a morning of telephone calls to banks, who appear to know next to nothing about on-line merchant card services. (one woman was very obviously reading from a brochure) Things are probably much better in the US than here in Canada where we have about 5 banks to choose from.
