Accepting payments online without a merchant account

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Accepting payments online without a merchant account

Copyright © 2005



Do you really need a merchant account?



Deciding when to get your own merchant account for internet

sales can be a confusing and expensive venture. If you have

a small to medium sized business and only sell a small

amount of products then having your own merchant account may

not be the answer for you.



Middle Persons And Binding Contracts.



You might not know it, but, in the initial stage of setting

up a merchant service, your direct contact is a middle

person or a sales agent working for an ISO (Independent

Sales Office). In most cases sales agents work on a full

commission basis and their commissions are either a straight

fee based on a lease amount they lock you in, or a

percentage of sales that you generate or in some cases,

both.



Even though equipment lease is a non-issue for e-commerce

since transactions are processed in real-time by a gateway

company, most merchants find themselves in a binding lease

for a minimum of 3 to 5 years.



Expensive Fees And Minimum Commitment.



Once you are approved by the merchant bank (after a business

and personal credit check), you are required to maintain a

minimum amount of sales per month (or pay a minimum fee) and

in a most cases, limited to making a certain amount in

monthly sales (limited to maximum amount of sales permitted

by the merchant bank).



Some of the costs involved.



Setup fee - Anywhere between $40 - $200 Monthly fees -

Anywhere between $25-$50 for statements and minimum fees.

Per transaction and charges fees - Usually between 2%-7 % in

fees and .30-$1 per transaction. Gateway fees - $10-$30 per

month (most gateway companies are charging a per transaction

basis now) SSL certificate - Can be as much as $250 Shopping

cart fee or software purchase - Monthly can range $20-$70

and software purchase can be as much as $1400.



In addition to the cost is the technical aspect of setting

up your site to use a shopping cart and real-time

processing. Not all gateways, merchant accounts and shopping

carts play well together. You must make sure that each can

work with each other.



Fast And Easy Way To Accept Payments Online.



Now, if you are a larger business or do a lot of sales each

month perhaps your own merchant account is the answer for

you. It can save you money in the long run. But if you are

just starting out with an online business, then a third

party payment service may be the answer for you.



Third party companies handle all the background details, pay

the monthly fees, assume the risks of fraud and charge

backs, and handle all the secure shopping your customers

will expect when shopping online.



There usually isn't a set up charge, gateway fees, SSL

charges and shopping cart set up. Depending on the service

you choose, they can give you simple HTML code to add to

your site or allow you to use "buy buttons" or both. Fees

range anywhere from 5.5% to 13.5%. Some companies charge a

set up fee and a per transaction fee.



Then there is always Paypal. A useful service for new comers

to the online payment arena but it has its drawbacks. With

Paypal:



Your customer must set up an account with them They can

FREEZE your account They can set limits on monthly

transactions Online Payment Solutions:



Clickbank Paypal 2Checkout



I suggest you explore all your options and decide what is

best for you financially and technically. A little research

online can save you money and time in the long run





About The Author:



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