Make A Website That Accepts Credit Cards
Hello
It's been awhile but I'm back with some more great information on how to build a website and accept credit cards online. This is by far one of the most confusing parts of operating a website that has a secure ecommerce shopping cart. Let's get into the fees that generally are associated with merchant accounts and in the next post I'll break down the options for merchant accounts based on fees & ease of use.
There are 3 primary fees associated with a merchant account.
1. Initial Setup Fees
2. Monthly Fees
3. Transaction Fees
Here is a breakdown a brief explanation of the fees. By the way, if you think reading a cell phone bill is difficult wait until you receive your monthly merchant statements. Your cell phone bill will look like a Dr. Seuss book.
INITIAL SETUP FEES - You'll generally run into two fees but these days the market is so competitive that many merchant providers have reduce if not eliminated their setup fees. The application fee is the fee that the merchant provider charges to setup your account. This can vary anywhere from $0 to a few hundred dollars. You will also find a Gateway Fee, the payment gateway provides an interface between your website and your merchant provider.
Think of it as your credit card terminal, you won't be able to swipe a credit card so the Gateway is the connection to your merchant provider. I personally use Authorize.net as my payment gateway and have never had a complaint. By the way, you generally won't find a company that waves this fee, if anything they will just add it into their application fee. Lastly, most initial setup fees are non-refundable.
MONTHLY FEES - You'll generally run into 2 main monthly fees but don't hesitate to ask about any additional monthly fees that a merchant provider or payment gateway may charge. Your monthly payment gateway fee will vary, I pay $25 for each of my Authorize.net accounts. This fee is for the use of the payment gateway's processing services and will include items such as transaction reports & many other miscellaneous charges.
The monthly statement fee is a fixed monthly fee that pretty much all merchant account providers charge. This fee is really a fee that merchant providers provide each month that really breaks down your traffic for the month in regards to charges, credits, charge backs. You'll find that even though your merchant provider claims a certain percentage of each sale, what they don't tell you is that these rates vary. For example, someone uses a card that offers them reward points, you're going to pay a higher percentage on those charges. The bottom line is there is not a way to avoid the monthly statement fees so just make sure that before you sign anything make sure that you ask as many questions about any fees that vary.
TRANSACTION FEES - These are another set of fees that you won't get away from because this is how the merchant providers make their money. Like I mentioned above, make sure that you get a full report on varying transaction fees, fees for declined transactions & even charge backs. By the way, a charge back is when a customer disputes a charge with their credit card company. Your merchant provider will charge you a fee in addition to refunding the customer. In regards to the transaction fees you'll run into two different fees of which I've broken down below.
Discount Rate - This is charged as a percentage of each transaction. This is the fee charged by the credit card company and your merchant provider adds a certain percentage to this number to pay their bills. These rates vary so much it's difficult to say what a good rate is, if I say 2.29% someone is going to say that they can do better but they don't tell you about the hidden fees that you don't see until your first monthly statement arrives. When you're just starting out you may find that your provider has a monthly minimum fee of $25. You may also find that as you do more business with a provider that you can earn better discount rates.
Per Transaction Fee - This is a fee that you pay per transaction on top of the discount rate. Let's say your 'per transaction' fee is $0.30, if you have 100 sales/transactions in a month your monthly transaction fee will be $30. Again, this is on top of all other fees including the discount rate.
Well that's it for now, hopefully this clears things up a bit and gives you an idea of the sort of questions to ask your merchant provider. We offer some great merchant account options so please take the time to look them over and give tech support a call at 1-480-624-2500 with any questions.
In my next post I'm going to list some great options for merchant accounts that can help you cut down on some of the costs associated with a full service merchant account.
Best regards,
David Lalumendre
www.WebsiteSpot.com