Merchant account basics

According to merchantseek,companies who accept credit card payments for goods and services tend to generate higher revenues than those who only accept cash. According to industry statistics, the average credit card sale is $40 versus just $9 for the average cash sale. If that isn't temptating enough, consider the disadvantage you may face if competitors offer credit card payment options and you do not. These days, the credit card payment option is a must, whether you have a physical retail outlet, take telephone orders or sell products over the Internet.

Besides the potential revenue boost, credit cards may well be a cheaper alternative to cash and checks. In a case study it is found that, credit card processing costs average 2.7% of any transaction, checks 4.0% and cash 4.8%. These figures make sense when you consider how many times paper money and coins must be counted and recounted by different individuals. While each business would vary in that respect, cash and checks still require more handling than plastic alternatives.

Establishing a Merchant Account
To offer the credit card payment option, you need to set up a merchant account-a bank account established by your company to receive the proceeds of credit card purchases. Typically, along with the account, you will also need to lease equipment and software to facilitate the transactions and ensure payments flow to your operating account. The process is slightly more complicated if you wish to accept credit cards online. In particular, you will need to sign-up with a payment gateway such as Cyber Cash or Virtual Net. These services allow for real-time credit card authorization for online transactions. It is essential that the payment gateway you choose is compatible with your software and financial institution so transactions flow properly. Any number of financial institutions offer merchant accounts, but you should look for a provider who has demonstrated expertise in working specifically with small and growing businesses. These organizations can often structure accounts faster and at better rates than those who cater to larger companies. As you shop around, you should also look for institutions that work with customers to combat fraud and reduce chargeback’s. And if you are conducting online transactions, you will want to work with a provider who has expertise in setting up and processing Internet merchant accounts.

For more information on merchant services,please visit http://www.paynetsystems.com

Credit Cards, Merchant Accounts

Credit Cards, Merchant Accounts, And Your Bottomline

Q: I'm opening a gift shop and want to be able to accept credit cards. I talked to the branch manager at my bank, but he didn't seem to know much about how it all worked. He did say that I would need something called "a merchant account" and something else called "a credit card processor." Beyond that he seemed as clueless as I am. I'm thinking about going to another bank. Can you explain how that all works? -- Mary Ann G.

A: Mary Ann, I'm going to give your banker the benefit of the doubt and say that a lack of knowledge regarding the specifics of credit card processing is not necessarily a reflection of the banker's competence. I have found over the years that most bankers, no matter how experienced or knowledgeable about the banking business they my be, don't really know much about how credit card processing and acceptance really works. That's because the task of accepting and verifying credit card purchases is handled by third party service companies who process and deposit (or settle) the funds into a bank merchant account.

The decision to accept credit cards is a wise one for any retailer. I agree with financial guru Dave Ramsey's teachings regarding the use and abuse of credit cards. Many people dig deep holes with credit cards that are hard to climb out of.

But, from a practical business point of view, any retail business that does not accept credit cards is leaving money on the table. Research has shown that accepting credit cards increases revenue and helps with cash flow since you receive the money within a couple of days instead of waiting up to a week for a check to clear.

Credit cards don't bounce, as some checks have a tendency to do. Credit card users are also more likely to buy on impulse and spend more when they do. Bad news for them, but good news for you. If you have a social conscience concerning the use of consumer credit cards, a retail operation probably isn't the business for you.

To accept credit cards at a brick and mortar location you typically need four things. The requirements may vary a little, but the following applies in most cases.
You will need: (1) A way to enter the customer's credit card information into a verification and processing system. This can be done with a swipe terminal, point of sale system, or by calling the credit card in by phone


About The Author
Tim Knox serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs. Related Links: http://www.prosperityandprofits.com

Choosing a Merchant Account

3 Points of Choosing A Provider

Point 1:
Do you need a merchant account? If you are a new business, with limited funds and you anticipate processing less than $1000 a month in credit card payments, we do not recommend a formal merchant account. The associated monthly minimums and bank statements of accepting credit cards may not be cost effective. You might want to consider a 3rd party processor such as PayPal, 2checkout and others as they have a Pay As You Sell model. There are risks involved with 3rd party processor such as lack of charge back protection and legitimacy. However, shoe-string business’s may find the saving out weigh the risks and lack of legitimacy.

Point 2:
If you are an established business, or a new business anticipating more than $1000 in credit card payments a month, then begin by comparison shopping online. Do not settle for what your local bank offers. All major processing banks use independent sales offices and agents called ISO’s and ISA’s, who often have web sites offering their merchant services. You can find an extensive non biased list of retail and e-commerce providers at Merchant Service Directory.
http://www.121merchantaccount.com/Directory/index.html
Many of the listed ISO’s will have agents in your area and will be available to meet you in person. By comparison shopping online you may discover your bank is charging much higher fees than you need to pay. This is a very common occurrence with local banks and can be avoided with a few minutes spent on line.
When comparison shopping, look at the discount rate, per transaction fees, bank statements, monthly minimums, length of contract, and cancellation fees.

A) Discount Rate and Per Transaction Fees.
The discount rate and per transaction fees are usually the most important items to consider. The discount rate is the percentage of each sale the processing bank will keep. The standard rate for a “swiped” merchant account is around 1.59%. This means for every $100 you accept in credit card payments, the processing bank will keep $1.59. A “non swiped” rate is usually around 2.29%. Both require a per transaction fee of some sort. Per transaction fees are an additional fee per transaction ranging between $.10 and $.99. A common pitfall of merchants is thinking lower discount rates and higher transaction fees are more cost effect. This may be, but you have to do the math to be sure. If you average small sales less than $20 a ticket, you will be better served by negotiating a contract with a higher discount rate and lower per transaction fee.

Here are 3 examples to consider.
1.49%, $.30 a transaction x 100 transactions of $20 each = $59.80
1.59%, $.20 a transaction X 100 transactions of $20 each = $51.80
1.69%, $.10 a transaction X 100 transactions of $20 each= $43.80
You see, the 3rd rate is better for high volume low ticket price merchants. The opposite is true for low volume, high ticket merchants.

1.49%, $.30 a transaction x 10 transactions of $200 each = $32.80
1.59%, $.20 a transaction x 10 transactions of $200 each = $33.80
1.69%, $.10 a transaction x 10 transactions of $200 each = $34.80
As you comparison shop please use our Merchant Account Rate Calculator to help you.
http://www.121merchantaccount.com/tutorial/calculator.htm

B) Bank Statements. The bank statement is a paper print out of your monthly activity. This should be between $10-$15.

C) Monthly Minimums

To assure a sufficient amount of revenue to cover the costs of providing good customer service, most ISO’s reguire a monthly minimum of transactions totals. This is usually around $25. This means you must process at least $25 worth of associated fees. Generally speaking, if you process over $1k in transactions you will meet the monthly minimum and this becomes a non-issue. However, there are some ISO’s who will waive this fee. This may seem like a bargin, but consider this. If an ISO is willing to lower their standard just to get a low level client, then it’s likely they will have numerous low level clients. Low level clients tend to consume more customer service resources. This burdens an ISO with less profitability and fewer customer service representatives to assist you when you need them. Good customer service is as important as fair rates. What you save in the upfront costs of rock bottom rates, you will pay for in the back side when you need good customer service. And, you will need good customer service at some point.

D) Length of Contract and Cancellation fees.
Most banks require a 3 year contract. The longer the term of the contract, the better the rates should be. If you are going to commit to a long term contract, then use it to your advantage. Demand better rates. In junction with the length of contract most banks have a Cancellation Fee. This fee is usually the sum of the remaining months times the monthly minimum. A monthly minimum of $25 x 12 remaining months = $300.
There are some banks that do not have 3 year contracts, though they charge application fees, set up fees, programming fees, over “cap” fees, and a whole handful of other fees that can total more than the cancellation fees.

E) Other fees
Other fees include mid and non-qualified rates, batch fees, charge back fees, AVS fees, gateway fees, terminal programming fees, customer service fees, annual membership fees and more. To make a thorough comparison, we recommend that you create a spreadsheet with all associated fees. To download a free example visit this link:
http://www.121merchantaccount.com/tutorial/Rate-Spreadsheet.xls

Point 3:
Now, that we’ve discussed the fees you should consider the last and final point of choosing the right merchant account. ALL, and we do mean ALL, processing banks are subject to rates set by Visa, Mastercard, American Express, Discover and others.
These rates are called the “Interchange Rate”. Essentially interchange is the “buy” price for all banks, ISO’s and ISA’s. Anything over this rate is what the ISO and ISA makes. It is not fair to expect an ISO or ISA to make nothing on the service they provide for you. However, it is not fair for the ISO or ISA to overcharge you either. What this point tells you is EVERYTHING IS NEGOTIABLE. If an ISO or ISA will not negotiate, move on. Another ISO or ISA will. Just make sure whomever you process through is an FDIC insured bank.

For more details visit: http://www.121merchantaccount.com/tutorial/index.htm

Online Merchant Account - Costs and Alternatives

Online Merchant Account

Merchant Account is a commercial bank account established by a merchant to receive payment via credit cards. Three parts are required to accept credit cards. Besides a merchant account, you need a local bank checking account to deposit funds and a processing solution, such a terminal or web-based store front to take credit card payments. Online merchant account, or ecommerce merchant account, is a merchant account that can take credit orders on the Web.

Cost of Merchant Account
An online merchant account will boost your online sales, but merchant account incurs various types of cost. A merchant account usually requires a one-time setup fee between $50 - $100. Some merchant account providers waive the setup fee in promotion period or in conjunction with other services. Other costs include gateway fee, statement fee, annual fee, transaction fees and discount rate fees.

Accept Credit Card without Merchant Account
When you first start an online business and have limited resources, the alternative would be to use the services of a credit card processor. You can enjoy the benefits of processing credit card transactions online without the requirements of a merchant account and high costs involved. Paypal, WorldPay, PaySystems and Clickbank are some of popular credit processing services. Popular shopping carts or online storefronts, such as eBay Store, Yahoo! Store and Microsoft bCentral, offer built-in credit card processing capability.

International Merchant Account
International merchant accounts ( http://www.4th-media.net/online_payment/international_merchant_account.php ) , or Offshore Merchant Accounts, are merchant accounts that allow the merchants to accept payments from around the world-- regardless of where your business or customers are located. Comparing to an online merchant account, two major services that come with an International merchant account are Multiple-Currency Support and International Fraud Protection.

Wireless/Mobile Merchant Account
Mobile merchants used to face unique issues when accepting credit card payments. With the advancement of high-speed wireless networks and mobile technology, mobile businesses are no longer limited in their payment options to just cash or checks.
Many merchant account ( http://www.4th-media.net/online_payment/mobile_merchant_account.php ) service providers waive application fee and setup fees to attract more businesses. However, the use of wireless service provider does incur the expense of the terminal hardware, activation fee, monthly service fee, and transaction cost

iKobo Review - The Latest Paypal Competitor

Ikobo is the latest "money transfer" company to hit the market in direct competition with Paypal.

As many are aware, I'm not a big fan of these money transfer services as whilst they allow you to accept credit cards simply and cheaply they have a number of limitations, give an unprofessional appearance and there have been numerous cases of legitimate account holders having their funds frozen while they are investigated.

Even iKobo may take similar action - this direct from their terms and conditions:
"You authorize iKobo, directly or through third parties, to make any inquiries we consider necessary to validate your registration. This may include ordering a credit report and performing other credit checks or verifying the information you provide against third party databases. However, because user verification on the Internet is difficult, iKobo cannot and does not guarantee any user's identity. At iKobo, we take protecting our network of customers very seriously. Sometimes our stringent security measures may affect accounts that are in good standing. We cannot disclose the specific criteria used to determine which customers are prompted to complete this process; doing so would undermine the effectiveness of our security measures.

Whilst iKobo claims to be the fastest growing money transfer company on the Internet, Paypal is still the industry standard with over 63 million users at the time of writing.
In the grand scheme of things, Paypal does have quite a lot of things in it's favour - namely that it's the original and has been around a long time.

This means that their systems are tried and tested and there are lots of third-party pieces of software available that you can use to interface with Paypal and add extra functionality to their systems.

It's also owned by eBay so you know they're backed by a large, reliable company.
So how does iKobo think it's going to flourish in this market - apart from having the novelty of being the new kid on the block?
Fees are almost identical to Paypal - it'll cost you 2.9% + 30c to accept credit cards at Paypal and 2.99% and 29c at iKobo.
And like Paypal, iKobo offers a free shopping cart, free setup, free application and no monthly fees.
Well there are a number of differences.
Firstly, to encourage more merchants to sign up iKobo are offering 5% cashback on all sales. Yes you make an extra 5% on all funds currently sent to your account. Not huge, but it's certainly not to be sneered at.

Interestingly you can (though I wouldn't recommend it) get your customers to pay the transaction fees ontop of the asking price of the product or service they're buying. However many people will not be happy with this arrangement and I suggest you shoulder the fees in terms of customer services.

However the key difference, as far as I can see, is the method in which you, as a merchant, actually get your hands on your earnings.

Paypal will deposit your earnings into a bank account for you, but iKobo will only do this for US based businesses. Everyone else (and even US businesses they they want one) uses an "iKard".
The iKard is a Visa card offered specially to anyone receiving money from iKobo.
Because a card is needed some might argue it's less practucal than Paypal, where you can send to any email address.

You of course also have to wait for your iKard to arrive the first time though once it's actually arrived you can use the card over and over as many times as you like.
As an example I looked at receiving just such a card here in the UK and depending on what delivery service I chose it would cost between $4.95 and $9.95 and take between 3 and 15 days to arrive.

However once this initial wait (and expense) is over, funds deposited into your iKobo account are available for you to spend with your iKard within minutes.
And this element I like.

Because if you have an unexpected bill, or want to take advantage of a time-limited opportunity or spot a great deal somewhere you can, for example, create a special offer at your website to boost sales, knowing that every dollar profit you make can be accessed minutes after your customer pays.
It's the clostest thing I know to instant cash, rather than having to wait weeks for checks to arrive and clear.

Now the downside of the iKard. There is a 99c a month fee to kee the card active and withdrawing cash at any ATM will cost you $1.99 though just paying with your card at a POS terminal (such as on the Internet, at the supermarket etc.) is free.
Lastly I have been quite impressed with the iKobo website which is attractive, easy to navigate and has a very user-friendly "help" section to answer most questions you may have.
I personally have registered for an account primarily because of the "cash on demand" element that I think could be really useful.

UK and International Merchant Account Provider Review

Whilst based in the United States of America, Durango offer online merchant accounts to any business anywhere in the world.

Consequently they make an excellent choice for UK and other international website owners. Couple with that the fast setup time, reliable technology and free application, and they really do become one of the best deals on the internet for accepting credit cards on your website in my opinion.

For a full-blown merchant account the time from application to actually being able to accept credit cards is between 24 and 48 hours - usually the lesser of the two.
I speak from experience. When we made trial applications just to see the process and service involved, we found from personal experience, that response times are measured in hours, not days, at Durango. You'd be hard pressed to find a faster response and I genuinely believe that.
I find this very reassuring as not only does it mean you can be set up very fast (faster, I think, than with WorldPay) but if you ever have a question or problem with your account, you're guaranteed a fast response.

Furthermore, whilst there is a setup fee, there is no application fee to pay so you can apply without any risk at all and see what you get offered. And only if you're accepted and guaranteed approval to accept credit cards do you pay the setup fee.
In this way Durango only make money when you get accepted so it's in their interest to sign you up and acceptance rates as a result are amazing - some 90-95% of applications are accepted no matter where in the world you're located.

Durango accept all major credit cards for their setup fees after acceptance so if you're strapped for cash and yet get offered an account, you can always put the setup fee on your card and then pay it off with your new-found profits next month.

Interestingly, rather than offering a "one size fits all" account, Durango provide a no obligation feedback form that enables them to analyse your business model, then recommend the merchant account from their range that would best suit your circumstances and your pocket. It's a nice touch.

The main guys at Durango, Ben, Shane and Bill really are great guys who'll offer you a very personal service to help you get processing credit cards fast, with as little hassle as possible. They've certainly passed my acid test in frank discussions over the last few months.
With a Durango merchant account you have the option of processing sales in US dollars, Canadian dollars, Pounds sterling or Euros so it's your choice.

Merchants are paid on time every 7 days either by cheque or directly into your bank account - it really is your choice. If in doubt, we always recommend direct deposit as it's quicker and saves you time in banking cheques each week.

To get set up easily to take Visa, Mastercard, American Express, Discover and JCB within the next 24-48 hours, just fill in their no obligation, free of charge, pre-application form. Shane or Bill will immediately email you full details on the best merchant account for your business.
It's risk free and there's no hard sell, so you've got nothing to lose. The only rule is that you must already have a "sample" website set up - not just a plan to set up a site - as they need to take a look at it before offering you an account.

I asked them (very politely!) if I could include a copy of their preapplication form on this site, and luckily they agreed. So if you're based outside the US, and you're interested in a merchant account, just fill in the simple form below.

Top 10 Merchant Account Services

1. iDeposit - Merchant AccountsIDeposit is a complete solution for accepting credit cards online.
2. Merchant Account at Yahoo - $39.95/MonthReach Yahoo! customers for only $39.95/month. Yahoo! Merchant Solutions, the reliable e-commerce solution. Credit card processing, 24/7 support. 30 days free hosting and set-up fee waived.
3. Accept Credit Cards TodayQuick, fast, and easy approval. No set-up fees, great rates. Get your merchant account.
4. Merchant AccountYou're approved. Easy qualify. Fast setup. Don't wait - read more
5. Merchant Account Services from VerisignWant to take payments over the Web, and do it securely, affordably and quickly? Sign up to get your free guide, "How to Create an E-Commerce Web Site" from Verisign.
6. Create a Retail Merchant AccountPaynet Systems provides point-of-sale payment processing solutions to meet the growing needs of your retailers with our electronic payment services. Accept all major credit and debit cards.
7. Free Authorize.net Merchant AccountFreeAuthNet.com gives you a free Internet merchant account (USA merchants only). No setup Fees. 2.09% discount rate. $0.24 transaction fee.
8. Need a Merchant Account? Free QuotesSubmit a quote request and receive free quotes directly from top local and national vendors by phone or e-mail. Compare credit card merchant prices and services and save
9. Merchant AccountLNC Merchant Services offers easy, affordable merchant account solutions for your business to accept and process credit and debit cards.
10. Merchant Account $0 Set-Up, U.S. OnlySame-day approvals. Signature free application. No paperwork. State-of-the-art processing solutions. Apply today.