More on Merchant Accounts

[Stevens]

This topic has been beaten a bunch. I thought I'd start over. Correct me if I'm wrong, but I think there are different degrees of merchants accounts that small business owners can obtain. I looked at 2checkout, worldpay, and paypal. Paypal grabs what...3% of a final sale or something like that? I think the 5.5% of 2checkout is ridiculous...I think!?

I'm thinking that if a business has a business bank account of its own, you can use the merchant accounts from the the bank itself or go somewhere else like Sam's Club or something that that offers charges of $.19 per transaction and 1.64%...but that may not provide a GATEWAY??? My bank, National City, boasts that it has Internet processing also (not sure if that is a user-backend thing or a manual processor-bank thing...probably the latter). That hoovers around $.25 per transaction and about 2%. That may all be physical POS processing stuff, but I'm not sure...hence I am posting. Do I need a merchant account AND a gateway? Or would a good gateway provide the merchant account also? How does the bank/gateway relstionship work?

Also, I'm trying to work with osCommerce (opensource). They say the gateways the software is compatible with are:

2checkout.com
authorize.net
iPayment
PayPal
PSiGate
SECPay
TrustCommerce

Is that all I can use? Would another free cart like phpcart be better because it supports more gateways? Also...everyone is raving over 2checkout.com. Are we sure we can't lower the overhead and find a good gateway that offers less than the outrageous 5.5% transaction fee? PayPal itself offers $.30 + 1.9-2.5% per transaction for merchants! That's half the OH just with PayPal! Anyway, if y'all have any insight, speak up...

ERIC

Hey Chris...what gateway do you use for CB Swords?

[Chris]

I use authorize.net as my gateway and globalpaymentsinc.com as my merchant account provider.

[Stevens]

What are the percentages, fees, monthly rates, and setup costs for those? I'm sure you have done your research...why'd you choose them?

Chris, I see you are using osCommerce too (obviously where I got the idea), did you just need to merge osCommerce, authorize.net, and your merchant account to get up and running? I'm still trying to figure out how that relationship works...thanks for your info...

ERIC

[Chris]

Its very easy to setup, however I did alot of editing to OSC to make it search engine friendly. I also installed some advanced authorize.net stuff to make it more secure.

All that aside though setting it up is as easy as filling out a form. Two common issues people run into.

1. Improper server setup of SSL.
2. No PHP:CURL on the server (messes up advanced authorize.net connections).
3. Server Time Zone not matching Authorize.net settings.

I pay 2.4% + .10 per transaction with a $10 monthly fee. Setup was $25.

I chose authorize.net because its probably the biggest such service so every cart will integrate with them, and I the other place was simply recommended.

[Todd W]

I use 2Checkout w/OSCommerce and my own cart for oscommerce and paypal. I will be upgrading to Authorize.net once I launch another ecommerce related site. Like Chris mentioned almost every cart or eccomerce package will work wtih an authorize.net account.

[stymiee]

This topic has been beaten a bunch. I thought I'd start over. Correct me if I'm wrong, but I think there are different degrees of merchants accounts that small business owners can obtain. I looked at 2checkout, worldpay, and paypal. Paypal grabs what...3% of a final sale or something like that? I think the 5.5% of 2checkout is ridiculous...I think!? There are two kinds of merchant accounts people can get:

1) A true merchant account - the merchant account is yours. You have to go through an application process to determine if you are an acceptable business before the account is established. If it is, your relationship is direct with the acquirer and you are bound by their terms of service and Visa and MasterCard rules. The costs for a true merchant account benefit merchants who process more then $1,000/month.

2) A third party processor - the merchant account is theirs and they let you use it. You only need to sign up to be activated. However, since it is their account and not yours, you are bound by their terms of service which are usually more restrictive then a true merchant account (typically it takes longer to get your money and they can hold money at a whim). The costs for a third party merchant account benefit merchants who process less then $1,000/month.


I'm thinking that if a business has a business bank account of its own, you can use the merchant accounts from the the bank itself or go somewhere else like Sam's Club or something that that offers charges of $.19 per transaction and 1.64%...but that may not provide a GATEWAY??? My bank, National City, boasts that it has Internet processing also (not sure if that is a user-backend thing or a manual processor-bank thing...probably the latter). That hoovers around $.25 per transaction and about 2%. That may all be physical POS processing stuff, but I'm not sure...hence I am posting.That 1.64% + 19¢ is for brick and mortar retail stores. It's simply not possible for ecommerce businesses. It also does not include a gateway. Your bank's rates sound good...if you're not rounding too much. Post what they literally are and I'll tell you if they are good or not.


Do I need a merchant account AND a gateway? Or would a good gateway provide the merchant account also? How does the bank/gateway relstionship work?Yes. The merchant account allows you to accept credit cards. The gateway is your physical means to actually accept them. The gateway connects your shopping cart to your merchant account. Typically the merchant account and gateway are provided by two different companies although it is very common for the merchant account provider to have the means to establish a gateway for you as well (as a reseller typically).


Also, I'm trying to work with osCommerce (opensource). They say the gateways the software is compatible with are:

2checkout.com
authorize.net
iPayment
PayPal
PSiGate
SECPay
TrustCommerce

Is that all I can use? Would another free cart like phpcart be better because it supports more gateways?OSCommerce supports a ton of gateways...which isn't important to you at all. All you need is for it to support the one you are going to use. It supports all major gateways so it's perfectly fine to use. (Remember, you're only going to use one gateway).


Also...everyone is raving over 2checkout.com. Are we sure we can't lower the overhead and find a good gateway that offers less than the outrageous 5.5% transaction fee? PayPal itself offers $.30 + 1.9-2.5% per transaction for merchants! That's half the OH just with PayPal!2checkout.com is only good for you if you are a very small merchant. If you plan on doing any real volume, 2checkout.com will rape you. Period.

[Stevens]

Perfect post stymiee...exactly what I needed to know. Any suggestions for a gateway/merchant account combo that might be good for a $1000/month processing site? I don't mind paying percentages, but monthly fees are a hastle and easy start-up is a must. Chris mentioned his two that he uses...any comments on that combo?

Chris - I posted in the SEO section on domain setup of an eCommerce site...any ideas?

ERIC

[stymiee]

Chris' rates of 2.4% + 10¢ is good. Especially if you have a low ticket price. That 10¢ transaction fee is outstanding. If he is happy with his curent provider you should get their contact info and get more information from them. Just make sure their Authnet pricing is reasonable.

[chromate]

I bow to John's knowledge of this stuff. But I know a lot of people use Worldpay very successfully. It's very easy to integrate, including with OSCommerce. As far as I remember, they charge 4.5% per transaction.

[aj8]

We use Worldpay (and are an accredited Worldpay Partner, so I guess could be biased!). Quite a few of our customers also use Worldpay though as well.

Some observations :-

* It is expensive to setup (just over £300 inc Y1 fees), but setup is very efficient and support is excellent

* It is middle-of-the-road as far as ongoing costs go. You get charged 4.5%. You also pay (IIRC) a 6p per transaction 'anti fraud check' charge. If you are processing Debit cards, you don't pay a percentage but you do pay 50p per payment.

* It has some nice extra features:-

If you want to accept phone orders, you can sign up for something called WorldAccess which gives you a 'virtual swipecard machine' on your web browser. This way you can type card numbers in that people have told you on the phone and process payments that way. Cost - one off £100.

If you want to process subscription type payments (i.e. once a month same amount) you can sign up for FuturePay, which again costs £100 once off to setup. You can structure initial and ongoing monthly payments etc.

And their support is probably the best (having dealt in depth with NetBanx, and loosely with Paypal, SecPay and another whose name I forget)... They always are a pleasure to deal with.

We are an accredited partner, so we earn commission for each account sold. I won't post our sign-up link, but if anybody does want to look more closely at Worldpay as an option do let me know and I'm happy to chat through the positives and negatives of it..

A.

[Chris]

I might be wrong about the per transaction fee. I just guessed.

[Chris]

Eric, I have set your usergroup back to "awaiting email confirmation" as your email is broken and so my inbox gets flooded with all the returned emails the forum is trying to send you.

[Will]

It seems like worldpay has high set up and monthly fees, doesn’t it?

[stymiee]

They do but for a lot of Non-US companies that the best choice.

[Will]

Yes, I also heard good feedback about this company. However to my mind their fees are too high for the small and new merchants.
As for me I would look for something cheaper.

[geddon]

I can confirm that worldpay is reliable but they charge much - based on experience.

[stymiee]

It's a shame merchants outside of the US don't have as many options as we do. There's so much competition that anyone who spends enough time researching it will almost assuredly be rewarded.

[Will]

So what are the options for merchants outside of the USA?
I think the list will be very limited.

[LivingLegend]

stymiee that was very accurate information but I would like to add a type of merchant account, that businesses use all the time, not knowing what they are getting into and was not covered in your article or anywhere in this forum for that matter. I will admit I have been in the high risk business for years and this may be a bit biast

*What is an agregator account?
an agregator account is when a merchant providor will take 20-50 low risk merchants and put them in a third party account and use those low risk merchants to sneak in a high risk merchant and all those businesses are viewed as one merchant.

(this ex. uses chargebacks as the reason this is not the only reason this is used)
example: Lets say I own a high risk business adult, credit repair, Online pharmacy the list goes on and on and I have a high chargeback % well to hide that some dishonest providors use those 20-50 low risk merchants and put them in one third party merchant account. Because they have low chargeback % they can then sneak that one high chargeback merchant in to that account. It benefits the high risk merchant because he now gets better rates than most high risk providors offer and the low risk merchants don't know anything about it they are usually small businesses who are about to get the shaft!

*Why am I about to get the shaft you ask?

simple they are ILLEGAL but yet high risk merchants still seek them out and about every two to three months they get shut down. The low risk merchant that didn't know anything about it can't accept credit cards until they find another providor and the high risk merchant waits a couple months until they can create or find another agregator account. There might be 2-6 months a year that they are out of business if you are one of this people don't feel bad I have placed merchants doing 150M a month in credit card processing who were duped into using this type of account often high risk merchants think they are getting better rates they usually are not.

* I did not wright this article to bash third party accounts, there are a lot of third party providors that do not do this and provide a invaluable service to very small merchants (not that I would recommend any) just wanted to raise awareness and strongly recommend not using this type of account as it will only lead to frustrations. For you low risk merchants agregator accounts are a lose/lose situation for you. For high risk merchants third party accounts have too many restrictions, do not offer unlimited processing volume, and most of the time they will cap your business and not allow you to grow.

I hope this article saves some High risk merchants and low risk merchants from a lot of agravation.

[Gate2Shop]

There are many that offer most of what they offer in the states, and a lot of them are opening offices in the state because of the world wide ecom demand.