Here Are 7 Things To Know About Online Merchant Accounts
Written by Trevor Weir Friday, 06 May 2011 08:33
It seems everyone is trying to make a living online. And as businesses are started, and products and services are put up for sale, there's usually a common question in the not too distant future: how do I get paid? Considering the hazards of checks and money orders, the most logical choice is to start researching merchant accounts. If you're seriously thinking about getting into the burgeoning Internet marketplace to make your fortune, here are 7 things to know about online merchant accounts.
1. A merchant account is a way for merchants (you!), to be able to collect the money someone owes you after he buys from you or hires you. It contains two separate entities: one that processes and clears the payment, and the second one that actually funds your account.
2. They can cost a tiny fortune between fees and surcharges. Make sure your read the terms and conditions and anything else that you need to sign. Seriously. The smaller the print, the more time you should spend reading it! Make sure you know what you will be charged in discount points. Don't get excited - you aren't getting a discount. Your are paying a percentage of your sales to the company(ies) clearing the payments. These points can be as low as 1.9% and reach highs of close to 6% or more. American Express has historically charged the most to use their card, which is why many retailers have stopped accepting Amex cards.
3. These companies aren't at all concerned about the success of your business or your overhead. They are indeed concerned about their own success, and in order to guarantee their futures, they think of every possible way to assess charges and fees that are totally insane when it comes to logic. Look for something that talks about early termination; you might get stuck in a multi year contract without knowing it.
4. As you continue reading the fine print, look for deposits, monthly charges, and automatic debits from your checking account. Again, many of these companies are in business to do nothing more than charge you fees in exchange for providing little service. Some charge you hefty monthly fees no matter what. (As if your "discount points" weren't enough, right?)
5. Let's say you didn't sell a minimum of $500 last month. You might see some odd and very high charges on your monthly statement! The less you make, the more they charge!
6. It takes times to get paid! Let's say you sell a downloadable eBook for $12.95. It clears through your merchant account. When do you get paid? Depending on the bank you signed up with, it can be anywhere from 3 to 10 days! And don't forget - you don't get your $12.95. Remember those discount points? You could end up with less than ten bucks!
7. And last but definitely not least, watch out for unauthorized customer refunds. Merchant accounts are notorious for listening to those crazy customers who will do anything they can to get their money back. You will find out at the worst possible minute that your merchant processor has refunded money to a customer without asking you for your opinion or for any documentation. Even if your website specifies "no refunds" it doesn't matter! You can spend months trying to get through mediation, but rarely will you win.
If you really believe you need a merchant account, stick with large well known processors with good reputations and reliable merchant support.
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