01 MERCHANT ACCOUNT: September 2009

How Merchant Accounts Can Save You Money by: Josh Greth

We all know that accepting credit cards is the key to online sales. Unfortunately, most merchants are unaware that acquiring a merchant account can actually save them money. And in many cases, big money!

For this experiment, we will use a fictional character named Bill. Bill owns and operates a great online resources for marketing tools and resources. Bills website is a membership based website, and therefore could potentially be approved for both third party processing and an internet merchant account. Bill starts off processing his business with a popular third party processor who offers him the following plan:

Start Up Fee - None

Monthly Fee - None

Transaction Fees - 13.5% (Initial or One Time), 15.0% (Recurring)

Bills sets up his business with this popular third party processor and charges $30 per month. He has built an extensive reciprocal link exchange directory, has purchased some PPC advertising on a few of the best search engines, and has reached a excellent spot in the content based search listings for the top 5 search engines. His customer base has grown from zero before accepting credit cards, to 150 members, is just one month. Bill can’t believe his success at internet marketing, and is planning on building even more web based resources and tools for his website, thus increasing the value and content. He is ecstatic at the initial results, so let’s take a look at Bills numbers:

$30 (Per Membership Sold) x 150 (Memberships Sold) = $4,500.00

$4,500 x 13.5% (Initial or One Time Transactions) - $ 607.50

$4,500.00 (In total sales)

- 607.50 (Total fees)

= $3,892.50 (Net profit after all processing fees have been deducted)

Ok. Well Bill certainly had an excellent first month accepting credit cards with his new business venture. But let’s see how Bill would have made out if he would have secured an internet merchant account for his new business:

Start Up Fee None

Monthly Fee $15.00

Discount Rate 2.35% (Initial, One Time or Recurring)

Per Trans Fee .30 cents

Gateway Mo. Fee $15.00

AVS Fees .10 cents

Now the first thing we see is that the merchant account company is showing us more fees. This may be disheartening at first sight, but we should really explore what these fees are, and how they affect our bottom line.

Start Up Fee: This remains the same. Bill paid zero to get setup with his new merchant account, just as he paid zero to get setup with the third party processing account.

Monthly Fee: The third party processor offered us no monthly fees, yet we must pay $15.00 with the merchant account company.

Discount Rate: The merchant account has labeled one of their fees as “discount rate.” These fees are the fees Bill will pay as a percentage of each transaction. They are similar to the main fee charged by the third party processor. This fee when charged by the merchant account company is substantially smaller than the high percentage charged by the third party processor. But we will wait till the end of this experiment to see who offers the better comprehensive deal.

Per Trans Fee: The merchant account company charges Bill .30 per transaction he processes through his merchant account. Of course, we have already established that Bill will pay no per transaction fees with the package he received from the third party processor.

Gateway Monthly Fee: Because Bill will also need an internet payment gateway for his merchant account to work online with his website, he will also be paying $15.00 a month for his Gateway Monthly Fee.

AVS Fees: The AVS fee stands for Address Verification Service. Bill will want to use this service, to help reduce potential fraud, and customer chargebacks to his merchant account. He will now pay an additional per transaction fee of .10 per transaction.

Let’s see the numbers behind processing with a merchant account as opposed to a third party processor:

$30 (Per Membership Sold) x 150 (Memberships Sold) = $4,500.00

$15.00 (Merchant Account Monthly Fee) - $15.00

$15.00 Gateway Monthly Fee) - $15.00

2.35% (Discount Rate) x $4,500.00 - $105.75

30 cents (Per Trans Fee) x 150 (Memberships Sold) - $45.00

10 cents (AVS Fees) x 150 (Memberships Sold) - $15.00

Total Fees (With Merchant Account) = $195.75

$4,500.00 (In total sales)

- 195.75 (Total fees)

= $4,304.25 (Net profit after all processing fees have been deducted)

With the merchant account, Bill was able to keep substantially more of his sales for himself, as profit. Bill could use these extra resources to advertise more, expand his operation, and even hire someone to work for him, even if only on a part time basis. The point is that that the better deal in credit card processing is always with a merchant account as opposed to using a third party processor. Most third party processors leverage the high levels of risk and chargebacks they must face everyday, by charging enormous fees and rates to their entire customer base. Third party processors are synonymous with Adult related websites. This is the reason for their increased exposure to risk. They must charge high rates to overcome the losses they are subject to by processing for a category of merchants that, unfortunate as it may be for them, falls into a certain level of risk and fraud that most other merchants do not. Because the merchant account company restricts its clientele to only companies with non adult related content, they are able to offer an entrepreneur like Bill, selling online content through his membership based marketing website, a much better deal in credit card processing.

$4,304.25 (Net Profit with Merchant Account)

- 3,892.50 (Net Profit with Third Party Processing)

= $411.75 (Total Savings with Merchant Account)

This experiment has shown that the average website owner can save substantially by choosing wisely when it comes to their credit card processing solution. We have proved that most any entrepreneur can and will save substantial amounts of money by using a merchant account for their online credit card processing, as opposed to processing with a third party processor. In our little test, Bill saved $411.75, and that was just in the first month alone. Remember, that the third party processor will charge more, 15.0% to be exact, per transaction, once the customer is charged on a recurring basis. This means that for the second month, Bill would have paid even more to his third party processor; $675.00 to be exact! And that is just on the first months returning 150 customers. Every time Bill has a recurring payment processed through his third party processing account, he would be subject to a 15.0% transaction fee on all those sales. Not a very thrifty choice for credit card processing.

As with any business decision, be smart. Compare rates and plans, and make sure the “simple” setup is really worth the cost. In most cases, your Merchant Service Provider can setup your merchant account in as little as 24 hours. This is faster than your third party processor, and adds even more value to the otherwise already vastly superior deal you are receiving with your very own merchant account.

Make the decision that is best for your business, and best of luck! Please visit Josh Greth at CardStreet.com.

About The Author

Josh Greth draws upon his 20+ years of Credit Card Processing/Executive experience in the field of Merchant Services. He developed, owns, and is the reigning CEO of CardStreet Cardservice Corp., a company that has been processing credit card transactions for over two decades. To date, they have established over 100,000 successful merchants and helped make their dreams a reality, by creating a simple, yet cost effective, means of credit card processing. For more information on credit card processing, or to obtain your own merchant account for a retail, internet, wireless or phone/mail order business, please visit CardStreet.com.

Credit Cards, Merchant Accounts, And Your Bottomline by: Tim Knox

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 http://www.smallbusinessqa.com http://www.dropshipwholesale.net

Compare Merchant Accounts by: Shane Penrod

“Compare Merchant Accounts” is one of the best pieces of information a company owner can receive. All merchant accounts are not created equal, and it will be up to you to find the best package for your particular enterprise. Here are a few tips to keep in mind.

Compare Merchant Accounts for lenders. You need to find a reputable lender that will work with you to protect and grow your company interests. Someone who doesn’t care or who issues a merchant account solely to make money is not the best underwriter to take on as partner. Look at things like how long the company has been in business, who manages it, other services that are provided, and the company’s standing in the business community. You may want to read the newspaper’s business articles archive for recent press releases or company news. You also could browse a few industry publications to get a feel for who the best lenders in the business might be. You want to find a lender with a reputation for integrity, honesty, and professionalism as well as capability.

Compare Merchant Accounts for services. A merchant account’s greatest advantage, at least as claimed by some experts, is the ability for a company owner to accept credit card payments. You need to find out which credit card payment method is best for your company. For example, do you plan to accept credit payments at your company’s location? Or will you or another employee take a wireless unit on the road for point-of-sale transactions at residential or business locations? Perhaps you are thinking about establishing a Website presence to attract customers from every location in the world. Find out what your preferred lender will support, along with possible fees for maintenance and service agreements.

Compare Merchant Accounts for costs. Some lenders may ask you to pay an online application fee. Others may want you to join and pay an annual membership rate. There can be print statement fees, gateway costs, and other expenses associated with your merchant account. In addition, you will have to pay for the actual service that may be calculated on a per-transaction basis costing perhaps a few cents per payment or a low monthly overall interest rate that may or may not impose certain minimums. Read the fine print, ask lots of questions, and be prepared to do your homework before signing the contract. A merchant account may be the single most important decision you will need to make on your company’s behalf.

Compare Merchant Accounts for service. Even in the application stage, does the company provide easy access to personnel who can answer questions or help you understand the process? Are the company associates courteous and knowledgeable? Can you follow their directions? If you experience a problem, is the company prompt in responding to issues and resolving complaints? If a problem arises with the processing services, will the lender work with you to reinstate service as quickly as possible?

Considerations like these can help you competently Compare Merchant Accounts!

About The Author

Shane Penrod is the owner of http://www.merchant-account-quotes.com A site where you can shop and compare multiple quotes from national leading merchant account providers. http://www.merchant-account-quotes.com.

Different Types of Merchant Accounts by: Mike Knudtson

After cash, credit cards are the most widely accepted means of payment in the world. No matter what business you are running, or what product you are selling. Chances are that you will require a credit card processing system. From American Express to Visa, the brand may vary, and since there is no such thing as an individual payment gateway for each individual company. Every company may have a payment system that is unique to them, but the payment gateway is what is the essential link. But before we go into the technicalities, lets get some of the basics out of the way. Especially some of the terms just used.

Any credit card transaction on the planet acts in a predefined manner, first the customer will offer his credit card details, the credit card details are then processed through a payment gateway, and finally the credit card payment is received in a merchant account. The way in which the credit card payment is accepted is different, you could be using the credit on a EPOS (electronic point of sale terminal), or you could have a successful online store that is accepting payments. The important thing to remember is that the mode in which you are accepting the payment is not as important as having a payment gateway and a good merchant account.

Okay so the next thing to discuss here is what is a payment gateway? well a payment gateway is usually a third party system that processes the credit card transaction it could be the server an EPOS dials out to, an e-commerce system, however the term payment gateway usually refers to the latter, and once the checks are done the funds are then transferred into a merchant account. The essential component is the merchant account, the merchant account is offered by companies and based on the volume of transaction and certain other criteria; the charges and upkeep is different. No merchant account is free as the company is offering you services. Merchant accounts in general are of various categories and depending on the type of business you are running, different monthly charges, and percentage charges are applicable.

Important merchant account types

a) Regular merchant accounts – Although in business there is no such thing as a typical business, however a majority of businesses are usually treated as regular merchant accounts, they have low maintenance fees and lower rates than other merchant accounts.

b) High risk merchant accounts – This category is usually reserved for high risk credit card processing accounts, for example accounts that handle a large volume of transaction that may or may not offer a 100% authorisation rate. An example will be an outbound call centre, that attempts hundreds of credit card transactions to verify the credibility of the credit cards. There are also additional complications like currency conversion involved. Hence the term high risk merchant account.

c) Specialized merchant accounts – There are some businesses that require specialized credit card processing, or might require a specialized merchant account that caters to requirements such as offshore processing, etc. Such merchant accounts are usually referred to as specialized merchant accounts.

About The Author

Mike Knudtson is the co-founder of the http://www.fastcharge.com Payment Gateway and the founder of merchant account provider Electronic Transfer, Inc. (http://www.electronictransfer.com). He has helped thousands of merchants set up retail and ecommerce payment processing for their business. Electronic Transfer, Inc. is one of the leading merchant service companies serving merchants since 1989.

Merchant Accounts - How to save money by: Ben Cloutier

Your business is successful, but now your ready to take it to the next level and begin accepting credit card transactions, or you have already taken this step but your feeling that your merchant account provider has high fees and your not sure what to do, or what other providers are out there?

You can save hundred's even thousand's of dollars per year by switching over to a new merchant. How is this so?

Just in transaction fees alone if one provider is charging you 35 cents per transaction and another Merchant account provider charges 25 cents you are already saving 10 cents per transaction.

If you process over 1000 transactions per month thats already $100 per month savings and over one year this amounts to $1,200.

Merchant Accounts can make or break your business, whether it is online, retail, phone, mail, or wireless. Every Merchant Account provider has fees that can affect your business in different ways.

We have compared the best merchant account providers currently in the business and we have detailed their fees so you know exactly how much you will be charged.

If you would like to find out who our trusted merchant account providers are and a list of their fees you can find it all on http://www.merchant-account-info-zone.com.

About The Author

Ben Cloutier

You can use any information in this article and can even use it in its entirety, but please make sure you link to my site http://www.merchant-account-info-zone.com.

Simple Way To Handle Different Merchants' Accounts As Easily As Different Mailboxes by: Egidijus Andreika

Being a merchant with many affiliates can be a very profitable business. However, most of the merchants find it clumsy and cumbersome to handle different merchant accounts in multiple systems. When you are able to offer multiple payment options the sales improve dramatically because it suits more people to do business with you. However, setting up different merchant accounts for each product and payment can be so, so tiring.

So what could be the solution here? It would be just great to be able to manage everything from just one place without the whole thing clogging up your sales-page with many buy-now buttons from all the different systems you man; where just one pay-now button would do the job. This would be not only highly functional but also effective and pleasant to the eye.

The only one buy-now button would mean more freedom, less time spent in manning and simplification of an otherwise highly cumbersome process.

The Benefits Of Handling Everything In The Same Place

There are many payment systems as you very well know and there is the limitation when you use such systems, i.e. you can do sales yourself but you cannot use an affiliate for the same. So, your profits would depend solely on what you can do yourself. If you had this limitation removed and were able to accept affiliates, would it not be great?

As a matter you could do so with the present systems, but the pain in setting up such an arrangements usually deter merchants from taking it up as the effort far exceeds the profits that would accrue from it. An affiliate would not only be able to multiply your profits, but also take a lot of load off your shoulders in promoting your products on different online websites, forums using various online marketing methods. Definitely, having an affiliate would help your business grow exponentially.

In this way you could set up as many affiliates as you have payment systems which would mean you could have the opportunity of multiplying your profits just so many times over.

There is tremendous benefit in being able to coordinate them through one point rather than checking them out individually. Each payment system could have its own separate commission plan, payment schedule, product list and so on. When you have a program that allows you to check on all of them just like you would check all your mail boxes through outlook express – this would save you time and a lot of headache, besides giving you instant information about all the payment systems.

Check For Programs With Which You Could Coordinate Your Affiliates

There are excellent programs out there such as Click2Sell.EU ( http://www.click2sell.eu ) which give you total and full control over your payment systems. This program helps you to have a complete picture in one panel so you could at any time check on any particular aspect of your accounts. Without such a program, it would be extremely not difficult but impossible for you to stay on top of every system; nor would you be able to have your own affiliates.

About The Author

Egidijus Andreika is a creator of Click2Sell.EU affiliate network. Click2Sell allows you to sell your products online and offer multiple payment options for your customers. Track and manage all your affiliates, sales, websites referring sales. Sell products online. Visit: http://www.click2sell.eu

Merchant Accounts and Shopping Carts For Your Wholesale Store: Updated Version! by: Joaquin Reveron

Do you know what are the best shopping carts for your own beneficial use when it comes to your company e-commerce store as of now? Perhaps you don’t even know what a shopping carts are, its importance or how it can benefit you as a seller at your own e-store or as marketer on eBay. Well, you don’t have to buy anything in order to know few of the best payment processors. You can get the details without paying in this very moment.

A shopping cart being the software that processes your products for final step in a transaction, the customers payment being the last step. Now a merchant account having the additions that not only in the majority of the cases has a shopping cart software integrated, it can process payments from at least two of the most popular credit cards, Visa or Mastercard.

The bottom line being for you, is that it can break your products sale once the customers is ready to finalize payment. So what shopping cart and merchant account gateway you end up using is as we in Puerto Rico say in our own Spanish term say it’s – importante – important!

So the details you want to read. Starting with Google Checkout! Do you recognize that particular brand name? Not the checkout word. The actual part of the phrase that says “Google” first! I know you obviously do and its brand is worth billions. Thanks to the initiative of two of the world’s elite visionaries that had the desire to provide a service in their country when the time was just right.

If you’ve been to quite enough seminars you’ve heard the coined phrased; “Google Me Mate” or, something between the lines. The facts are, anything associated with the brand of Google – at least when it comes to being massively published and known – turns to gold. Their stocks as doing a double check in Morning Star as of today is worth at least twenty times more per stock, than twenty fortune 500 “billion dollar” companies combined, in today’s market.

So as you could imagine, anyone with a nice taste for Pavarotti’s lines (even if he didn’t sang the song for the first time) can happily sing “La Donna e Mobile” with ease when having security as their main process payment objectives. So, yes, Google Checkout is still a preferred checkout system no matter what checkout newly appears online. There are numerous more. But, one more that I definitely want to share with you do to the limitation in length with some of my content publishers.

Thanks a trusted referenced idea of another successful New Yorker. It should definitely be a unanimous decision to have your payments through - what seems to be - according to worldwide feedback and reputation power, an excellent merchant processing company, authorize. I’ve not used the merchant yet, but I saw the process as a customer and I’ll be using it myself after talking with the company to have a few questions sorted out.

If you’ve a wholesale video games store or an electronic merchandise store, just Google the word “authorize”. Google is still way more captivating when it comes to brand association when it comes to your shopping cart logo confirmation. But such dot net version of this last merchant I am adding here has substantial benefits that Google Checkout just doesn’t have integrated yet.

Apart from the numerous merchant versions you’ve seen stripped away across search engines while doing diligence for your store, “authorize” has up-sale capabilities that virtually aren’t popular or seen for Google Checkout. These are the facts!

However, you also need to remind yourself that when you’re starting an internet business and launching fast is a priority to you, the “keep it simple, stupid” famous phrase applies to anyone that wants simplicity. But if you want to do it correctly, right from the beginning, and you happen to have multiple items up for sale – get a programmer to do the dirty work for you in an adequate merchant account.

I mean, if you’re not an Einstein C++ or Linux, PHP look-alike geek or the likes from college A list, consider hiring someone who loves and has studied what he does best –it’s just marketing 101. So before you leave, get this two companies in your mind for long enough as they are two of the best ones you should also have in mind. I think my publishing space is limited? Have fun!

About The Author

Joaquin Reveron is a coach, mentor, speaker and online wholesale veteran. His focus online are on eBay and helping people create wealth through wholesale niche stores. He is also a wholesale powerseller and author of http://www.videogamesmystery.com