You may need a merchant account to process online credit card payments for your home business. Sometimes start-ups have limited resources. Opening a merchant account is a big decision. How do you choose the best?
If you believe you're processing less than $ 1,000.00 a month in a credit card transaction, we don't recommend a merchant account. Claims and monthly fees can be very expensive. In this case, you may want to consider using third-party processors such as AlertPay, PayPal, or 2Checkout. They allow you to accept credit cards and allow them to charge only during the actual sale. Refunds and fraudulent transactions are much more dangerous when third parties are used to process credit card payments. However, if you have a limited budget, you will find that the savings outweigh the potential risks.
On the other hand, if you think that credit card sales exceed $ 1,000.00 per month, you should look at what different companies have to offer. Don't be happy to verify the first merchant account you have opened or assigned with your local bank. Most banks use independent sales offices called ISO and ISA, and there are usually sites on the Internet where you can get information about merchant services. You can also find a wide range of retail and e-commerce suppliers in our online merchant services guide. Many of the ISO certificates obtained will be an agent available in your area and will be happy to welcome you.
By comparing, you can conclude that online sources will charge significantly less than your bank. It is normal. When comparing, some differences need to be considered: the discount rate, the transaction fee, the account statement fee, the monthly minimum, the duration of the contract and the cancellation fee.
Discount rates and transaction fees.
In general, the most important elements to consider are discount rates and transaction fees. The discount rate is the percentage you pay for each sale processed. Typically, this percentage of "scanned" cards is about 1.59%. If you use a card that is not drawn, the discount rate is about 2.29%.
A transaction fee will be charged for a card that has been transferred and not transferred. The fee per transaction is in addition to the above discount rate and usually ranges from $ 10 to $ 0.99. Traders often use the misconception that they believe that if they have a low discount rate and a high transaction fee, they get a better deal. It's not necessary, Merchant Services Agent Program so you should do some math to see which one is best for you. If most of your sales are less than $ 20.00 per ticket, you should sign a contract with a higher discount rate and a lower transaction fee.
Many ISOs have a minimum dollar level that must be met to cover customer service costs. This is usually around $ 25.00 minimum. This means that sales must earn at least $ 25.00 with discount points and transaction fees. If you have more than $ 1,000.00 in credit cards per month, you'll meet the minimum monthly requirements, so it won't be a problem. There are some ISO certificates that waive these fees and they may seem like a bargain, but you have to consider the consequences. If they want to reduce the regular fee to get customers who don't have that much fee, then they will likely have a lot of such customers. A low-paying customer uses more customer service resources, which makes it harder for ISPs with lower profit margins. It can also mean that fewer customer service staff help you when you need help. If you keep the package due to price and too low prices, you may regret that you will receive less than satisfactory service.
Termination of the contract and fee.
Most banks will need a 3-year contract. If you stay on a long-term contract, the bank will usually give you a better rate. If you are not offered a better price, you should join the conversation. I also understand that most banks will have a cancellation fee. This fee is usually a monthly amount multiplied by the monthly minimum. The minimum monthly minimum is $ 25 x 12 months = $ 300.
Some banks will charge an application fee, setup fee, programming fee, and various other fees instead of an extended fee, while some banks will receive both.
There may be some other charges. These include interim and ineligible rates, down payment, return fee, AVS fee, gate and station fee, programming fee, annual fee and much more. You need to create a spreadsheet for all the banks you are thinking of to get a better idea of which will be most cost effective for you.