Every day, hundreds of new entrepreneurs start up a website with hopes of one day quitting their day job or making some extra income. They have the idea; hopefully some web knowhow, and are ready to get their hands dirty. For many web-based businesses, notably ecommerce or subscription-based services, this also requires accepting credit cards over the web. For the uninitiated this can seem like a daunting task.There are many places to start your search when looking for a suitable payment gateway, such as Authorize.net or Chase Paymentech. But with an industry as competitive as merchant services, there are a number of alternatives to the big guys.
How much processing do you need?
Before signing a contract with the first company you come across, it is important to determine how much processing you expect to be doing. If you are going to be doing under $1000 a month, you are probably best off by going with PayPal. Their system is very easy to integrate into your website and the costs are reasonable. The big advantage with PayPal is you are not required to sign a contract, and you do not have to pay a lot of frivolous fees.
If you anticipate doing a sizeable amount of processing each month, it may be in your best interest to find a full-fledged processing company. This will allow you to negotiate better rates and save on your total processing fees.
How do you get the best deal?
The credit card processing industry is famous for their shady business practices and difficult-to-read contracts. It is important to make sure you completely understand any agreement you sign, or find someone to help you, such as an attorney. Once you are ready to negotiate, you need to have a full picture of the costs each contract has so you can understand what your totals fees will be.
Since the credit cards are going to be “keyed in” rather than “swiped”, the cost of each transaction will be slightly higher due to the higher risk associated with online purchases. It is vital to understand what it costs for these types of transactions with each company you are speaking with. Often times they will give you a rate that is based on their best possible tier (which will be cards physically present and swiped). Online purchases will never fall into this category, so it is irrelevant. Demand to know what the keyed-in rates will be.
Negotiate, negotiate, and NEGOTIATE!
Almost everything in a payment-processing contract is negotiable. If you accept the first agreement presented to you, you are sure to overpay. It doesn’t matter if it is the percentage charged for each transaction, the per-transaction fee, or the any other miscellaneous fee, try to get it lower. If they will not budge, find a competitor that will.
About Author: Eric Stauffer is part of a business-consulting firm that assists merchants in obtaining the best merchant services contracts possible. They also review companies like ProPay and Elavon, and educate business owners about the best and worst companies to work with.
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