Friday, June 15, 2012

E-Commerce Merchant Account Pricing Considerations

In order to set up an eCommerce merchant account, you need the following:
  • A functioning website with a valid SSL certification.

  • A shopping cart - to allow your customers to enter their payment information.

  • Online payment gateway - the online equivalent of the point of sale (POS) terminal facilitates the transfer of information between your website and your processor or acquiring bank, quickly and securely.
The first two should be provided by your website developer. The eCommerce payment gateway service will be provided and set up for you by the credit card merchant processor (e.g. UniBul) that you will choose to work with. You should not be paying any application or set up fees. There will be a monthly gateway service fee and it should not exceed $15 per month. There is another monthly fee that you will be charged and it is a bank fee. Different merchant services credit card processing providers may call it differently but, in essence, it is a processing statement fee. It should not cost you more than $15.

So you should not have to pay anything until you actually start using your PC based credit card processing service. Your biggest concern, however, as far as costs are concerned, should be your credit card processing rates. You should carefully study your pricing proposals before making the decision which credit card processing service provider to select. I would recommend that you contact at least ten credit card processing companies and request a detailed proposal from each one of them. The payment processing cost consists of several components and you need to know exactly how much you will be paying for each one of them. Following is a breakdown of the most common fees and charges associated with an internet credit card processing account:
  • Discount rate - the amount a merchant is charged by his acquirer for processing the merchant’s transactions. It consists of a percentage fee (e.g. 2.25%) and a fixed, per transaction, charge (e.g. $0.25). For an internet or direct marketing account it should be no more than 2.20% + $0.25 per transaction.

  • Authorization fee - another "per-transaction" fee. You should not pay more than $0.12 for any type of account.

  • Application and set up fee - one-time fees to apply for and set up your credit card processing service. You should not pay any set up or application fees!

  • Monthly statement fee - as the name suggests, it is charged monthly to keep your account on file. You should not be paying more than $15.

  • Support fee - another monthly charged for customer service. You should not pay any such fees.

  • Payment gateway fee - specific to the eCommerce industry. It should not cost you more than $15 per month.
If you see any other charges for your credit card transaction processing account, you will be well advised to look elsewhere. Also, when evaluating a new proposal, your prospective processors should provide you with comparison tables to make your choice a better informed one.

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