I would have an idea of how much it might cost to have a merchant account. I am inter

Re: I would have an idea of how much it might cost to have a merchant account. I am i

Hi msmiller36,

I am the CEO of SmartPay Systems, a merchant services company. You're correct in saying that rates that are advertised vary quite a bit. There is a fairly simple way to estimate what your costs will be to take credit cards online.

Visa/Mastercard and Amex all charge a base wholesale rate for you to accept credit cards. It varies depending on the type of business you run based on the level of risk your business may experience due to fraud. If you run an ***** oriented website, your wholesale costs will be higher compared to a less contraversal website.

Merchant Services companies add a small percentage to the wholesale rates.

Based on normal calculations you can expect to realistically pay a little over 2.9% of your total purchase amount to accept credit cards. There are some other fees involved which I included in the estimate for you. Merchant services companies that advertise 1.09% rates aren't being 100% honest with you. Those rates apply to debit card purchases only where the cost to process is much smaller.

I hope this has been helpful. Feel free to drop me a line if you have any further questions. I'd be more than happy to help you make an educated decision if you feel it would be beneficial to accept credit cards on your website.

Best regards,

Ryan
SmartPay Systems
www.smartpaysystems.com

Re: I would have an idea of how much it might cost to have a merchant account. I am i

msmiller36;44905 wrote: I would have an idea of how much it might cost to have a merchant account. I am interested in having a merchant account for selling products online. I've heard of different rates in the US. Can someone please give me more ideas?

Your bank can give you the best idea, but you probably don't need a "real" merchant account yourself unless you're doing a lot of volume. What most people start with is a service that has their own merchant account. they sell you a psuedo-merchant account.

Fee's vary by volume - number of purchases per month, high, low, and average purchase cost, type of product - physical or intagible - e.g. is it a mountain bke, or a download?, the way you confirm the cc info/customer, and the number/percentage of chargebacks. And also if you are a "real" business - e.g. legally - and if so, for how long.

I resell for e-payment and they're pretty good from a resellers viewpoint. I also like ikobo and 2checkout. Leaning more towards ikobo no recent problems in the past year, low fees, nice api, good charge-back policy, and easy access to the $.

ikobo and 2heckout would be on my A list for someone just getting into e-commerce. e-payment is a little more involved. I like e-payment for recurring billing, but 2checkout, and I believe ikobo have both got new capabilities in that area.

All payment services have had problems art one time or another. ikobo, 2checkout, and paypall seem to have put most of them behind them. Paysystems is going through a bad time right now, and it would be best to avoid them - IMHO.

EDIT: BTW - $ savings on cc fees by being a "real" business" will often cover the cost of getting set up as an LLC within the first year given a moderate amount of sales.

Re: I would have an idea of how much it might cost to have a merchant account. I am i

Pro Merchant advantages:
- Avoid the $1 fee per sale that Amazon charges non-Pro-Merchant sellers
- Ability to create new ASINs for products not yet in their catalog.
- Import product listing via spreadsheet

Pro Merchant disadvantages:
- Need to sell a lot of widgets just to cover the $40/month nut. For a 20% markup, that's $200+ in revenue just to break the surface.
- Your listings will still appear below Featured Merchants.

In general, Amazon has a strong trust factor with shoppers, and lots of shoppers have payment methods and addresses already set, so shopping is painless. But the organization of their catalog is terrible for anything other than books or electronics.

and if your competitor has already added your product to the catalog, you're stuck with their descriptions, and shipping weights (which are often way off the actual weights). Your pricing formula must take that into account.

Re: I would have an idea of how much it might cost to have a merchant account. I am i

Hello friends

As odd and maddening as it seems to a business with sales pouring in, merchant account providers do shut down accounts (thereby preventing the business from accepting charge cards) if the total dollar amount of transactions a merchant processes in a given month is over a preset limit the merchant account provider allows. So, if the merchant account provider has assigned a limit of $5,000 in transactions a month that they will allow to be processed through your account, and you go over that amount, say, by the 20th of the month, you may not be able to process any more credit card transactions until the start of the next month.

In addition, merchant providers will shut down accounts and hold back a significant amount of funds for months if they see a very large, sudden spurt in the total sales put through a merchant account and/or an unusual upward swing in the average dollar amount of sales for an account. For example, if you have been averaging around $25,000 in credit card transactions a month, and then suddenly shoot up to $10,000 a day, your account might get shut down, especially if you are an Internet or mail order merchant. If the provider worries that the spurt in sales could be fraudulent, they may hold back a huge amount of funds (ie: not transfer the money to your bank account), as a reserve against possible future chargebacks. That can bury you in a deep, dark cash flow hole if you were relying on the incoming funds to pay off the bills for the inventory you shipped, new inventory, salaries, etc.
Why do merchant card providers do such things? Why would they shut down accounts when sales are increasing and a business is growing?

Thanks for all