For many e-Businesss, finding the right payment method can be a challenge. Since the Internet is a one-stop shop, it’s highly recommended that an ecommerce website accepts credit / debit cards and online cheques as payment methods. To accept credit card payments, you’ll need to set up an ecommerce merchant account with your merchant bank. Once you’ve set up your merchant account, your online processor will provide you with software or a gateway to process your transactions. Choosing a merchant account is one of the toughest business decisions you’ll have to make, as ecommerce merchant accounts have almost doubled in size and now number in the hundreds. Make sure to ask about the cost of setting up your merchant account before signing up. Check out the list below.
Application Fee
The application fee is mandatory to allow an agent or bank to “examine” you as a candidate. Only a few companies are more likely to pay this fee if you are rejected, while others will not. It is always best to avoid paying an application fee that is not refundable if you are rejected.
Minimum Account Billing
This fee is imposed when you transact with a merchant bank for the least amount of business. Most banks require a minimum monthly transaction fee of at least $25. Anything below $35 is considered acceptable.
Statement Fee
If there’s a significant need for minimum-bill service, then there shouldn’t be a statement fee. However, many banks charge one to cover administrative fees. If you’re assessed a statement charge, it shouldn’t exceed $10 per month.
Charge back Fee
A charge back attempt occurs when a customer is unsatisfied with a purchase, unable to get a refund or is looking for a free product. In this case, the bank returns the customer’s funds and debits the account for the entire amount. Always inquire about the charge back policy of your bank. Most banks are more loyal to their cardholders than to merchants, so avoid charge back fees.
Transaction Fee
This fee is calculated on each transaction and typically ranges from 2-3% of the purchase price. For example, if a product is priced at $100, it would cost the bank $2-3 to process the transaction. Rates vary depending on your business, expected volume and credit history, but you should never be charged more than 3%.
Setup Fee
This includes all the administrative work required to set up your account. If installation or programming fees are required, there should be no setup fees. There is a lot of work involved in setting up merchant accounts, so you can expect fees ranging from US$50 to $500. Before you approach banks or intermediaries about setting up a merchant account, keep the following in mind:
- Please read the terms, conditions, and expected fees carefully. Do not sign anything until you are satisfied with the answers to your questions. Take your time to understand what you are receiving and how much you will be spending to receive it.
- Don’t you need a reserve account? You don’t, but if you’re a start-up online business, have bad to moderate credit, expect small volumes or run a “risk” business, you may need one.
- How long will it take to get the funds you need? Ideally, it should take less than 72 hours for funds to be available once the order or transaction has been processed.
Below are a few of the companies you can set up your merchant account with: Paypal - Free PayPal account allows you to accept credit cards right away on your website Click bank - Provides digital product distribution and instant affiliate network to promote your business North American bancard - Full service payment solutions provider of credit, debit, eBT, check conversion and guarantee, checks by phone and net