Should
I choose a merchant account or 3rd party processor?
- by iMerchantNetwork.com
If you are a brand new business, have limited funds or you
anticipate processing less than about $1,000 per month in credit
card transactions, I do not recommend a credit card merchant
account for your business. Why? The list of fees including
monthly minimums, gateway/terminal fees and the cost of bank
statements by accepting credit cards may not be cost effective
for you. You may want to test your business model using a third
party processor and switch to a merchant account when you are
sure your business is expanding.
Standard merchant account fees:
Monthly minimums = $25 per month
Statement fees = $5 - $10 per month
Virtual Terminal / Gateway fees = $10 - $35 per month
Other merchant
account fees include the following:
- mid and non-qualified
rates
- batch fees
- charge
back fees
- AVS fees
- gateway
fees
- terminal programming
fees
- customer service
fees
- annual membership
fees
- and more...
(remember
to always read the fine print, especially for a merchant
account agreement).
Third
Party Processors
You'll find that the discount rate and transaction fees are
higher with a third party processor but many people find
it worth
the
price.
Why? There are no other
fees involved (maybe a one-time-startup fee).
Even better, third party processors
provide
everything
you
need to get started in just a few minutes. Usually, all
you need to do is insert a few lines of .html code into
your
web pages and you are all set to process credit cards.
Note: If
you do choose a third party processor, save your monthly
sales revenue sheets and statements. You
will need these later
on if you want a merchant account at competitive rates. Banks & merchant
processors will insist on seeing a history of your processing
transactions. It helps greatly in their decision making process
(and your rates!). If you use a third party processor and don’t
save anything, you will generally have NO leverage when applying
for a merchant account later on.
A few third party
payment processors: PAYPAL, 2CHECKOUT.COM &
CLICKBANK.
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iMerchantNetwork.com
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