How
To Find the Best Online Merchant Account For Your Business
What a great idea! Start accepting
credit cards and watch your profits soar. Nothing could be simpler. Or
so you thought until you began researching merchant accounts. It can all
get extremely confusing. There is an easy way to find the best deal that
suits your business. You'll be able to compare apples to apples and have
a clear picture of what the merchant account will cost you.
Let's take a look at some of the
phrases you'll encounter (in layman's terms) when you begin to search
for a online business merchant account.
-
Merchant Account Provider - The company who arranges
for your payment hardware or software and your ability to accept
credit cards.
-
Nova - The company who processes the credit card
transactions and forwards them to the appropriate credit card company
for payment (Visa, MasterCard, American Express, etc.)
-
Set Up Fee - The one-time amount the merchant account
provider charges to set up your company in their system. For this
example, we'll use a set up fee of $65.00.
-
Discount Fee -One amount (there are others) that Nova
and the merchant account provider deduct from each sale as a portion
of their payment for your merchant account. We'll use a discount fee
of 2.25%.
-
Per Transaction Fee - This is a second amount that the
two companies subtract from each transaction as a portion of their
payment. For our example, we'll pick a per transaction fee of $.35.
-
Terminal or Gateway Fee - Whether you have a real
terminal or a virtual gateway via the Internet, you will be assessed
monthly charges to cover the use of that service. Let's say $10.00 for
our example.
-
Statement Fee - The fee for your online business
merchant account
provider to send an itemized statement each month. An average amount
we can use is $15.00.
-
Annual Fee - An annual fee just for having your
online business merchant account. For the annual fee example, we'll choose $35.00.
I know what you're thinking! But don't
give up before you start. Remember, I'm going to show you a way to
decipher all this information.
Choose a number -- any number. This
will be the total number of transactions you think you might conduct
during the course of a year. For our example, we'll use 100. Next,
choose an average transaction amount for your product or services. We'll
say $175.00 for now. Finally, we'll calculate a year's worth of charges
for
a online business merchant account
by using the amounts above and within the definitions.
Set Rate Charges:
Set up Fee = $65.00 (one time only)
Gateway Fee = $10.00/mth
Statement Fee = $15.00/mth
Annual Fee = $25.00/yr
Then multiply your estimated number of
transactions by the $ .35 per transaction fee. That equals $35.00. Next,
multiply the average transaction amount ($175) by the discount rate of
2.25%. That equals $3.94. You've estimated that you'll have 100
transactions per year, so again, multiply the $3.94 by the 100
transactions. The total equals $394.00. All that is left is to add them
all up.
Set up Fee = $65.00 (one time only)
Gateway Fee = $10.00 x 12 months =
$120.00/yr
Statement Fee = $15.00 x 12 months =
$180.00/yr
Annual Fee = $25.00/yr
Per Transaction Fees = $35.00/yr
Discount Rate Fees = $394.00/yr
Total Fees & Charges For One Year =
$819.00
Let's look at one other quick example
just to show you that looks can be deceiving.
This company offers the following
rates:
Set up Fee = FREE
Gateway Fee = $15.00/mth
Statement Fee = $10.00/mth
Annual Fee = FREE
Per Transaction Fees $ .30
Discount Rate Fees = 2.35%
Software Lease = $24.95/mth
Based on our same $175 average
transaction and 100 transactions per year, we come out with the
following figures:
Set up Fee = FREE
Gateway Fee = $15.00 x 12 = $180.00
Statement Fee = $10.00 x 12 = $120.00
Annual Fee = FREE
Per Transaction Fees (100 transactions
x $ .30 = $30.00)
Discount Rate Fees = $175 avg.
transaction x 2.35% = $4.11 x 100 transactions = $411.00)
Software Lease = $24.95 x 12 = $299.40
(an additional fee our first provider
didn't charge)
Total Fees & Charges For One Year =
$1040.40.
Even with free set up and no annual
fee, this company still charges over $200 per year more than the first
merchant account provider we previewed. Be very careful - the word
"free" can often times be deceiving.
Online business merchant account
can open a world of new business for your company. They can provide a
very convenient way for your clients to pay - and for YOU to get your
money. However, when you shop for a merchant account, be sure to use a
standard unit of measure like we've outlined above to be very sure that
you are getting the deal best suited for your company.
About The Author
Diane C. Hughes *
ProBizTips.com
FREE Report: Amazingly Simple (Yet Super Powerful) Ways To Skyrocket
Your Sales And Build Your Business Into A Tower of Profits! ==>>
http://madmarketer.com/diane
