Ecommerce Merchant Account Guidelines

Article Written By: BrianArmstrong

Getting setup to accept credit cards with a credit card merchant account is a relatively easy process and can be done without much hassle. I've put together this brief guide to introduce you to a few components of internet merchant account pricing and a couple of comparisons to Paypal which has a good service as well. The discount rate is typically what every merchant asks about when calling me for quotes. Although this is important, I can mark this down very low and still have merchants paying just as many fees as other providers. I guess what I'm trying to say is that don't overlook other fees when faced with an andquot;awesomeandquot; discount rate. Expect to pay around 2.1 to 2.5% for your qualified rate. Competitive rates are usually anything below 2.25%. Paypal doesn't have a andquot;qualifiedandquot; rate as much as they just charge a flat rate of 3% which is on the high side. Paypal does a fantastic job of making things very simple and easy to manage. They're higher priced on some things, but their simplicity makes up for some of the higher price.

A non-qualified or mid-qualified rate will usually add on an additional .5% to 1.5% for these transactions that are andquot;downgradedandquot; 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.

Batch header fees would probably considered by most merchants one of those andquot;hiddenandquot; fees. This is a fee that most merchant don't ask about and unless they look closely, don't know about and never question. These batch header fees may be as much as $100 per year or so depending on how often the merchant processes credit cards. What happens is that transactions are batched together usually daily and submitted. Each one of these batches are assessed a batch header fee of about $.25. So, for an easy way to calculate this, if you process transactions every day, you'll be paying $.25 per day. So, even on your busiest month, this fee wouldn't exceed $8 per month.

Monthly fees for a traditional merchant account are usually around $20 or less. For a statement fee or account maintenance fee expect to pay about $10 and for an internet gateway, such as Authorize.Net, you'll probably be paying an extra $10 as well. Work with your merchant account provider to waive the monthly minimum, especially if you're an internet business processing less than $1000 per month in gross volume. If you're processing over the internet with a traditional account, you'll need a gateway. Authorize.Net is one of the more popular gateways and although some providers give this away for free, they have costs associated with this and will usually hit you with an annual fee or some other fees along the way to make up for this. Try to negotiate your monthly rates so that they are lower even if you end up paying a little more for the setup. Authorize.Net shouldn't cost more than about $100 to setup. I'd recommend against leasing as you'd end up paying 5 times as much for the setup over the 48 month lease you'd be stuck with.

There are some advantages to Paypal over your more traditional merchant accounts. One such advantage is ease of use. Paypal is very user friendly and Authorize as a gateway would be a close second. Most shopping carts are compatible with both and include modules to be able to install both or either. Accepting credit cards is a necessary evil in today's internet world, but can be done with very little hassle or headache.

About the Author

Brian Armstrong has been setting up ecommerce merchant accounts since 2002. His focus is in not only helping internet businesses get setup with their credit card merchant accounts, but also helping internet business owners after their account has been setup to process more transactions by getting more traffic to their websites and converting that traffic into sales.

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