Internet Merchant Account

Accepting credit cards on-line can be a confusing subject.  Let's take a look at two ways you can process transactions on-line:

Real-Time - Allows you to automatically process credit card transactions from your website without your intervention.  The customers comes to your site, complete the information requested in the secure order form and submits the order.  The transaction is automatically sent to the bank for processing and the money is then deposited into your bank account within 2 to 3 business days.  If you need true, "hands-free" operation of your web business then using Real-Time is your method.

Virtual Terminal - Process transactions manually by logging into a secure website from any computer connected to the Internet.  This is a great solution to use in ADDITION to Real-Time processing, especially if your business is on-line.  It's great for processing orders you receive by phone, mail or fax.  It also makes a great mobile processing solution if you hook it up to your laptop.  To work this solution, all you need to do is login to the secure Virtual Terminal that your merchant account provider directs you to.  You then enter in a username and password.  Afterwards, you enter in a customers credit card information and submit the order for processing by the bank.  The money is then deposited into your bank account with 2 to 3 business days.

Costs Associated with Internet Merchant Accounts

• Real-Time Purchase Cost:  $99 and up (one-time fee; Virtual Terminal solution usually comes free)
   
• Application/Setup Fee:  up to $100
   
• Gateway Fee:  up to $20/month
   
• Statement Fee:  up to $15/month
   
• Monthly Minimum:  up to $25/month
   
• Annual Fee:  $0 to $100/year
   
• Discount Rate:  2.29% and up
   
• Transaction Fee:  $0.30 to $0.35

Secure Gateway Companies

To process your credit card transactions, there are a number of gateway companies you can route your transactions through.  Each merchant account provider works with at least one gateway company.  Some of the popular gateway companies out there are:

• Authorize.Net
• NexCommerce
• ECHO
• iTransact
• VeriSign
• Paradata
• SkipJack

These gateway companies act as the secure "tunnel" in which transactions go through once someone purchases an item from your website to the processing bank.  Each company has their own setup procedures you must follow when setting up your order form.  You will need to have some basic HTML knowledge in order to setup the service to work properly with your website.

Most gateway companies charge a monthly gateway fee to use their service, usually $10 to $20/month.  When you sign-up for an Internet merchant account, the gateway service comes with it.  On a side note, ECHO does not charge a gateway fee.

Recurring Payments

Does your business require scheduled debits from your customers accounts?  Most all Internet gateways (like the ones listed above) offer a recurring payments function that can easily and automatically debit your client's credit card or checking account.

Charging customers annually?  You might find obtaining a merchant account to be difficult if you only allow for yearly recurring deductions.  Most banks that merchant service companies work with find there are higher instances of chargebacks.  Since this is the case many banks will not approve merchant's who accept only annual memberships.  However, you may have a better chance if your company will also allow monthly or quarterly payments along with annual.  As a rule of thumb, the more in advance you wish to charge customers, the harder it is to get approved.  Sticking with a monthly recurring payment cycle would probably be your best bet.  If you can only charge annually I would suggest going with a 3rd party processor instead of getting your own merchant account.  You will of course pay higher a higher processing charge, but at least you can process those annual payments.  Another solution would be to use a real merchant account for all other product/service sales and just use a 3rd party processor to process annually charged products/services.

Company Suggestions

Recommended Resources:

Merchant Accounts to accept credit cards - MerchantSeek.com - Eliminates the hassle of searching the internet for credit card processors by providing a one stop resource for merchants looking for credit card processing information.

Top 3 Merchant Account Pitfalls REVEALED! Avoid the mistakes many people make when choosing a merchant account provider for their business.  Learning this information ahead of time will save you time and money both in the short and long term. Avoiding merchant account pitfalls