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Online, it's a no-brainer. More customers
will buy from you if you accept credit cards. Customers have gotten used
to instant gratification, and if you can't offer a way to make a safe,
secure, and immediate transaction most of them will do business with
someone who can.
It's true that you can accept credit cards without a merchant account,
using online services such as Paypal. But these services require users
to register, log on, and jump through many additional hoops. Merchant
accounts are the safest, most convenient form of online payment
processing available. However, not all merchant accounts are created
equally.
If you're considering merchant account
services, you need to understand how online credit card transactions
function, and how fees are typically structured. By knowing what to
expect, you can find the merchant account service that best fits your
situation.
One of the first things you need to understand is that a merchant
account can involve several different services. |
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But a one-stop shop, such as Ensight
Merchant Services, can save you a lot of extra expense and confusion. If
you're a retailer with a brick-and-mortar store, you'll usually have a
credit card terminal that links you directly to your merchant account.
However, in order to accept credit cards online you'll need a payment
gateway and a service to integrate your gateway with your website,
shopping cart, or whatever system you plan to use to accept credit cards
online. The payment gateway allows you to accept a customer's payment
information, and also validates the information prior to sending it on.
The information is transmitted to your merchant account itself, where
the transaction is processed.
All of these services have to be seamlessly integrated in order for you
to accept credit card transactions. That's why it's helpful to have a
single merchant services provider who can handle it all for you.
Different merchant account providers charge different fees, which makes
it hard to compare your costs without doing some heavy number crunching
and a little bit of guesswork.
The fees you can usually expect to pay are an application fee, a fixed
monthly fee, discount rates, transaction fees, termination fees, and
miscellaneous fees. Not all merchant account providers will charge you
an application fee, and if you can find one that meets your other needs,
this is a good way to reduce your startup costs.
On top of this, there's a monthly fee that's fixed, regardless of the
number or amount of sales you make. Your "discount rate" and transaction
fee will vary each month, and they depend on several factors.
The transaction fee is a fixed amount that you pay every time you
process a credit card transaction. The discount rate is a small
percentage of each sale, usually two to four percent. This rate assumes
the most simple, low risk transaction. But sometimes you'll have to pay
a higher fee for credit card transactions that are considered to be
complex or risky.
Merchant accounts for retailers will usually get the discount rate. The
sale is made in person, with the buyer physically present, so the risk
is low. Online credit card transactions are another matter. When you're
setting up a merchant account to accept credit cards over the internet,
be sure to ask if you'll qualify for the discount rate. It's possible
you won't qualify, and will have to pay a higher rate.
Many merchant account providers have a termination fee. Be sure to ask
about this before you sign on. Termination fees will tie you to a
merchant service provider who may not be the one best suited to you.
There are many merchant services out there, and it's possible your first
choice won't turn out to be your best choice. A termination fee just
makes it more costly to switch, and it's usually worthwhile to avoid
merchant services which charge one.
You should also be aware of miscellaneous fees such as chargebacks and
refunds. You'll only have to pay these on rare occasions, but it's
important to be ready for them. It pays to give your selection of a
merchant account some thought. For example, if you sell big-ticket items
you'll usually be better off with a merchant account service that
charges a smaller percentage of each sale, even if the fixed costs are
higher. Likewise, for a new business that may start out slow, you'll
probably prefer to keep your fixed costs down.
Starting a new business or expanding your current one can be
exhilarating and exhausting. By knowing how the fees are assessed on
your merchant account, you can avoid unexpected charges and make a
smooth, profitable transition.
Barry Feintstein |
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