The Real Scoop About Merchant Account Rates and Fees
By Chris West, CDGcommerce
June 21, 2004
About CDGcommerce
CDGcommerce is a registered ISO/MSP for Provident Bank and a provider of leading-edge payment
processing solutions, specializing in Internet and e-commerce merchants. For more information, please visit
their Web site at http://www.cdgcommerce.com or call CDG at (888) 586-3346.
So… you’ve decided to setup your own merchant account. You’ve seen the many different options available
to you on the Internet. Chances are, you have even received some e-mails or postcards with great
promotions and offers.
The big question now becomes – which merchant processor to select? And how can you tell whether the
merchant account proposals you are getting are really a good deal or not?
Many merchants do not fully understand the nuances of merchant account pricing – and so they are often at
a disadvantage when comparing proposals from various providers.
The purpose of this article is to explain common merchant account terminology and describe the various
rates & fees that you should specifically look for and ask about…. before signing off on any merchant
account application or agreement.
Understanding the “hard costs” behind Merchant Accounts
The first thing to understand about merchant account pricing is to get a handle on the costs associated with
a merchant account.
First and foremost, ALL banks and merchant processors have the same core cost – the InterBankExchange
(“Interchange”) costs, dues & assessments from Visa and MasterCard. It is important to note that the very
same Interchange fees apply to all banks and most ISO/MSP’s across the board – regardless of their size or
volume.
On top of these costs, there are network costs. These network costs are the transactional costs that are
incurred to send a credit card transaction request across the bankcard networks to interact with the
cardholder’s issuing bank. These network costs do vary from acquirer to acquirer based upon on the volume
and contract(s) negotiated between the acquirer and the network provider(s).
Beyond the Interchange and network costs, there are other costs such as the payment gateway fees that
are incurred, the “account on file” and other costs that are assessed to merchant providers for maintaining
their merchant account portfolio, BIN sponsorship fees, risk reserves and customer service costs associated
with operating a portfolio of merchant accounts. All of these fees do vary from one processor to another but
are all generally in the same ballpark.

Here are two differant accts with differant fees.We personally use these folks as they are easy to deal with and show ALL tyhe charges and fees before you sign up.

Internet Merchant account
Quantum Gateway

Authorize.Net
Accept credit cards online

Most companys viewing Internet merchant processing, as a risk This is an area that has often been considered “too risky” or “too complex” by most typical banks and ISO’s.

hen you opened your new business, you thought that everything would be fairly straight forward. After all, businesses every day complete credit card processing, online credit card approval, and internet business. But finding the right way to set up these services for your particular business can be complex and time consuming.

How To Set Up Credit Card Processing

If you want to accept credit card online, you’ll need to set up a credit card merchant account with a reputable firm. There are countless resources available to the new business owner for just this occasion. A wide variety of them can be found online. Search for either credit card processing or credit card merchant account online and begin to visit some of the sites listed in the search results.

Each company will offer its own version of a merchant account. You will sign a contract and pay a regular fee to use the services provided. They company should provide you with all the equipment and software necessary to successfully accept credit card online.

The Options

If you are looking to set up an online account so that you may accept credit card online, you will want to establish a relationship with a reputable company that has been doing business with internet companies for a number of years. Read the testimonials and make sure that the website covers all of your questions and concerns.

Some companies will charge you set up fees or programming fees. Compare each credit card merchant account side by side to see which one charges fees for which services. If fees are waived down the line, it may because the set up fee is so high. If set up is free, you may find hidden fees that will be charged to your merchant account at a later date. Set up a comparison chart for yourself with the major features and what each company offers.

What You Need

Obviously, if you want to accept credit card online, you’ll need to have a website or at least a presence on an existing site.

Most credit card merchant account will require that you pass a credit check. Be sure that you can meet the qualifications of the company you choose. Decide on a back up company or two if you have bad credit or a history of late payments. If you are turned down by your first choice, you can apply to the second or third company on your list.

You will also need an online shopping cart for your customers to use during their visit to your website. The shopping cart stores the items they wish to purchase until they are ready to complete the transaction. With credit card processing, the shopping cart totals all merchandise, plus tax and shipping charges. The merchant service you choose should provide you with an online shopping cart.

Overall, remember to check the reputation of the company you choose and don’t settle for a credit card merchant account that doesn’t meet all your expectations. If one company doesn’t offer what you’re looking for, keep looking.

ABC’s of ECommerce Merchant Account

What are Merchant Accounts?

The process of buying products through the internet has become so convenient that we become unaware that there is actually a complex system of commerce that goes with it. With the birth of the credit card, business owners have realized its potential on making their products more accessible to their target consumers. This is when merchant account providers come into the picture. Merchant account is way for business owners to accept payments through credit cards.

What are Payment Gateways?

Aside from the merchant account provider, there is also a middle party that oversees how the actual exchange of payment information takes place. It is the online version of a cash register. Upon payment, the consumer enters encrypted information into the merchant’s web browser. The payment gateway then sends another encrypted information from the merchant account provider then into its acquiring back and lastly into the issuing bank. The seemingly complicated process of exchanging encrypted information between the different parties takes only around 3 seconds.

What should business owners look for in an eCommerce merchant account provider?

Reputation, integrity and compliance are some of the important characteristics that a merchant account provider should have. Business owners may study the history of the company by looking through the company’s financial statements, tax accounts, credit returns and its Dunn and Bradstreet credit file. The merchant account provider should also be properly registered to the Payment Card Industry (PCI) Data Security Standards (DSS) and is insured to the Federal Deposit Insurance Corporation (FDIC). Business owners may also inquire with the Better Business Bureau (BBB) to look for any complaints, if any, that have been filed against the merchant account provider.

The merchant account provider must also offer a reliable technical support. The technical support must be available for 24-hours through the net or the telephone. Most preferably, there is a qualified technician that would personally respond to any problems associated with either the software or hardware. A few seconds lost through a technical problem would also mean loss of profit.

Business owners should also look into the cost that the merchant account requires from them. There are additional costs to consider other than the typical costs that goes with merchant accounts like interchange fees, transaction fees and monthly fees. There are hosting fees, website maintenance and design costs and website start up fees. Most of the time, the less you pay for these additional costs, the less is the quality you get and the poorer service you give to your costumers.

What are the risks associated?

The risks associated with an eCommerce merchant account provider are basically the same as with the traditional merchant account provider. Fraud is the most common scam in online transactions. Hackers may enter into the system and transfer credits into their own accounts. They may also steal the customers’ personal information from the merchant account system and use it for other fraudulent transactions.

Other risks may also be accounted to the part of the costumers. They may falsely claim that the product was not properly shipped, that it was not accurately described as it was on the website or that they may not actually have received. The customer may also complain of unfair or incorrect billing.

What are some of the best eCommerce merchant account providers?

Charge.com easily tops most of the reviews of merchant account providers. Some other highly praised merchant account providers are Merchant Account Express, CyberBit and Electronic Transfer.

Do you know of competitors who are using a Web merchant account? If so, chances are they are more than satisfied with the benefits this type of account can confer on a business of any size. Assuming this is the case, do you really want to be left behind as your colleagues begin to see profit increases from 50% to 400%? Obviously not! Now is the time to maximize your company’s potential by applying for a merchant account that will support your company’s image and credit card processing operations on the Internet. If you already have a Website, let a merchant account make it even better by enhancing your technical operating functions. If you don’t have a Website, a merchant account can make it easy to put one up and start accepting credit payments from your clients.

When you apply for a Web merchant account, you are asking for a bank or another financial underwriter to support your credit excursions into the world of e-commerce. As more and more business owners look to technology to improve the way they do business, they will need support from banks in the form of credit services and technical assistance. A company Website is the perfect means of showcasing your company to every customer in the world. You don’t have to rely on expensive print or broadcasting media. Just register for a domain name, find a host site that accepts a low monthly rental fee, hire a designer to help you create a fantastic company image, and you’re in cyber-business! Your merchant account can help to pay for these services and assist with locating the technical help you need to make them happen and keep them operational. Alone, you may not make much progress, but with a powerful underwriter working behind the scenes, your company could emerge front and center in your industry.

A Web merchant account will let you extend credit card payment services to customers from every nation in the world. You don’t have to wait for checks in other types of currency to arrive or have them converted at your bank, and then wait again to be sure the funds are in the account of origin. With a credit card processing feature on your company’s Website, you can easily and quickly process each transaction, or several transactions at once, to keep the cash flow steady and your customers satisfied.

Your Web merchant account will let you adopt other equipment as well, like a pager, a wireless credit card processor for remote destinations, and a digital credit card processor. Gone are the days of manual payment processing that require patient effort on the part of both customer and cashier. Now customers can pay their own bills with a credit card, usually without the help of a company employee. Some start-up effort with the help of your merchant account will let you turn your attention to other things while sales pretty much take care of themselves.

Find out now how your business can benefit from a Web merchant account.