Credit card processing / Merchant services.

Wow. Anyone find a more confusing/mind boggling topic?


Wondering what configurations and rates some of you out there are using for credit card processing.

2checkout is simply ridiculous with over 5% of gross, monthly expenses, etc.

 

Let me know what you want to know about it.

It is definitely a huge disorganized system but can be fairly understandable when broken down properly.

Just to start and probably confuse you more, 2checkout is not a payment processor. They are a 3rd party processor. Paypal, 2checkout, Ikobo are 3rd party processors. These companies basically act as a middle person in processing credit cards. You are not actually signing up for a merchant account when you get setup with them. And yes, they are rather expensive, but they are fairly easy to get setup with. The application process is minimal and there is rarely a setup fee or contract term.

On the merchant account side of things, your business goes through a fairly extensive application process. Both the businesses and the owners' credit is checked, and the business is qualified for a merchant account based on credit, the business type and expected sales volume. The positive is that your business is responsible for its own processing and not another company. The rate you get is normally much lower as well. As long as you are a US based business and not in a high risk industry, the rates normally starts at about 2.00% per transaction with a $.20 - $.30 / transaction fee for keyed in or internet transactions.

Look for a merchant account provider and not a 3rd party processor if you want a lower rate.

Like I said, let me know what questions you have and I will be happy to answer them here. Its hard to just start explaining because there is potentially so much information that I could talk about.

On the topic of 3rd party processing, here is a blog entry I wrote a while back that explains the basic differences between the 2.
http://www.merchantaccountblog.com/archives/34

 

Fantastic response

In a nutshell, simply for selling ebooks and the like, a 3rd party like 2checkout would be the way to go I assume... not very high volume anticipated.

The business is not incorporated yet, so I assume that negates out being able to grab a merchant account.

It's a niche market with hundreds of thousands of rabid fans that is TOTALLY untapped; profits could easily quickly be in the thousands per month within 6 months. Can't say much more...

I alreayd have x-cart all set up and configured and completely overhauled the templates... and now this jazz. All part of the learning curve I guess. Should I scrap the install of x-cart and do a simple php site w/ 2checkout checkout buttons? LOL

 

2Checkout is a decent choice, but options could be good. I find a lot of people are very happy using Paypal as well.

 

Xcart is good because it can be configured so easily with different payment systems. Since you are starting out, I would start with paypal or 2checkout. Once your business approaches about $1,000 per month, you should start looking at merchant accounts. With the xcart, you will probably want to go with authorize.net (AIM method) and get the module that configures directly into your website. I think xcart has 2checkout modules, so you if you like the setup you can probably just keep it through the whole thing. A lot of people use paypal as an addition to a merchant account which can be a very good idea as well. To me, the more convenient you make it for your customers to pay, the better.

As far as incorporating goes, it is normally easier to get a merchant account approved if the business is a sole proprietorship. Corporations sometimes cause problems since they are normally owned by several people. Nothing major usually but a little more time to get approved and some other paperwork requirements.

Also, if your business has steady growth, you should definitely setup the merchant account with the intent of processing much more than your are at the time you sign up. This will help prevent future problems with processing limits and such.

 

Paypal Web Payments Pro is a good choice. Runs great, and has been free for the last few months.

 

x-cart does indeed have a 2checkout module.


I just think it may deter customers from buying if they have to put their address info in on my site, then get sent over to 2checkout to finish it up.

I like how paypal is slightly more integrated into the site w/ their checkout system.


However, I have heard many horror stories about paypal, and cancelled my personal paypal account back in 2003.

http://paypalsucks.com/ ... I know it seems stupid, but I personally know people who have been burned.

 

btw, jestep, I like your blog.

 

If you are in the United States and expect to do more than $1,000 a month, 2CO / Paypal might be a good option. If you only need a merchant account for a couple of months - you might check out www.cdgcommerce.com.

If you are in the United States and you do plan on doing more than $1,000 a month, look into a merchant account with an electronic payment gateway (Verisign's Payflow Services, LinkPoint, or Authorizenet.com).

With 2CO - you are using their merchant account to seel your services / products and actually they are really selling your items according to their TOS

 

Hmm, could also try ClickBank.

They accept both Credit Cards and Paypal on your behalf, and have a really excellent affiliate system built it, which makes it very easy for other ClickBank users to sell your products.

The downside is the huge fees they charge. From my experience, ClickBank has had a much faster support turnaround compared to 2CO (sometimes took 72 hours+ for a response from 2CO). 2CO also have alot tighter guidelines for things you're allowed to sell (I lost my account for selling items relating to online computer gaming).

You can't go too wrong with either of them though.