| How To Accept Credit Cards by Matthew
Coers
If you plan to do business online, then your website will need to
accept credit cards. For many, the idea of applying for a merchant
account sounds like a daunting task, but the truth is that building
an online store is incredibly easy these days. The major credit card
processing companies have improved and streamlined the process of
setting up accounts, and software companies have had several years
to improve their software to the point that it is easy for non-technical
business owners to create and operate an online store effectively.
If you are interested in knowing how credit cards are processed,
you can read our free article, “Credit Card Processing Issues
You Should Be Aware Of”.
3rd Party Processors – The cheap way to start
For the beginning web entrepreneur, the most important issue in credit
card processing is how much product you think you can realistically
sell in a month. If you are selling less than $1000 per month, then
you will want to go with a “third-party processor”. PayPal
is the most widely known and reputable third party processor, and
you can easily set up an account with them HERE.
Unlike traditional merchant accounts, PayPal accounts are free to
set up and cost nothing on a monthly basis. You will pay more per
transaction with PayPal than you would with a traditional merchant
account, but for low-volume start-up businesses making less than $1000
per month, you will gladly choose higher transaction costs over account
set-up fees, monthly account fees, minimum charges, interchange fees,
gateway fees, and perhaps worst of all, account cancellation fees
(just to name a few).
Steps You Need To Take To Set Up A PayPal Account
1. Bank Account – you will need a bank account for PayPal to
deposit your funds into.
2. Apply for a PayPal Account (you can access their account application
here).
Traditional Merchant Accounts
If your processing volume will be higher than $1000 per month, then
you will probably want to go with a traditional merchant account.
Credit card processing companies generally charge a minimum monthly
fee that is approximately equal to the amount of money you would pay
to process $1000 per month. Generally speaking you can expect to pay
around $50 per month in minimum charges for a merchant account. As
you process more, your costs will go up, but the percentage of your
gross sales that you pay for processing should go down.
Steps You Need To Take To Set Up A Traditional Merchant Account
It is not difficult to set up a traditional merchant account, but
you will need to follow several steps in order to pull it off.
1. Get a business license
2. Get a business bank account at your bank
3. Make sure your web host supports your shopping cart system (you
might even be able to get your shopping cart system bundled in with
your credit card processing services for free).
4. Try to determine the amount of business you will generate. Your
credit card processing company will want to know how large each transaction
will be, and how many transactions you expect to have per month.
5. Negotiate with merchant account providers and establish your merchant
credit card account (see list of merchant account providers).
Following are several merchant account providers you may be interested
in contacting:
www.paypal.com PayPal allows you to accept payments instantly without
the need to set up special accounts or sign long-term contracts. You
will want to strongly consider using this one if you are processing
less than $1000 per month.
www.totalmerchantservices.com Total Merchant Services is one of the
largest resellers of merchant accounts both on and offline, and are
trusted by literally tens of thousands of businesses of all sizes.
They use First Data as their back-end processor.
www.merchantexpress.com This is a well-respected processor that services
both on and offline businesses.
www.expandyourbusiness.com
CardService International provides a very helpful eBook that you can
download for free HERE
Some Issues You Want To Consider
1. Generally speaking you will be more concerned with up-front and
recurring fees rather than the discount rate that processing companies
will quote most prominently. The hidden fees generally eclipse the
discount rates – especially for low volume start-up businesses.
2. Try to accurately estimate your business volume when you fill out
your applications. The risk department at your processing company
can put a freeze on your account if your volumes move significantly
outside the estimates you have provided them.
3. If you do experience a sudden spike in orders, you should contact
the risk department of your processing company to make them aware
of the spike BEFORE it hits their system. They may want to have you
send them details about the orders and provide proof that the orders
are legitimate. As inconvenient as this is, it is far better than
getting your account frozen. For more information about the Risk Department
at a credit card processing company, please read our free article,
“Credit Card Processing Issues You Should Be Aware Of”
on ProfitChoice.com.
4. Make sure you understand what fees you will be responsible for
if you need to cancel your account before the end of your contract.
You may find that you need to shut down your account for a variety
of reasons, and you don’t want to find out about exit fees after
you get the bill!
In conclusion, you should start off your search for credit card processing
by making a realistic estimate of your processing needs. If you believe
you will be processing less than $1000 per month, then you will probably
want to work with a third-party processor like PayPal (you can sign
up for PayPal here). If you will be processing more than $1000 per
month then you will want to work with a traditional credit card processing
company (see list of processors above). You should be more concerned
with upfront and recurring fees than with the discount rate. Once
you have selected a processing company, you will want to make sure
you have your business license and business bank account. Finally,
you will need to make sure that your shopping cart system supports
your processing company. If you still have questions about Merchant
Credit Card Accounts, you can access a free in-depth article on the
subject here.
About the Author
Mr. Coers specializes in helping entrepreneurs build effective web
businesses. His website, www.profitchoice.com contains useful articles
and "how-to" guides to help organizations build their brands
and sell more effectively.
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