Merchant Accounts

To Have A Merchant Account, Or Not To Have One
.....That Is The Question!

ONLINE PAYMENTS

.....Do I, Or Don’t I ?

One of the most common questions raised by people who are interested in starting an online businesses is "Should I accept just credit cards on my site,” and “Just where do I start, to be able to accept online payments at my web site?"

The thought of setting up your web site to take online payments can seem like a major hurdle for new business owners or aspiring netpreneurs. However…. the fact is that it is not a difficult process at all. Indeed, there are many varied programs around so that even if you are concerned about your ‘credit-rating’ most people will find a merchant card vendor who will work with them to find a program which fits their particular needs.

If you want your business to be successful, you MUST offer convenient and easy ways for your customers to pay.

Credit cards are the 800 lb. gorilla of the online payments world. The fact is that over 95% of all the online orders we receive are placed with credit cards. No online business can survive today without offering this payment option.

There is light at the end of the tunnel, because actually setting yourself up to take credit card payments on your web site is much easier than you think. In this article we will show you;

...how to do it in as little as 48 hours.

If you are reading this and you already accept credit cards please read on because there are other elements of this important feature outlined in this article which you will need to take into account.

Today online payment methods, include DEBIT CARDS, which are poised to become a serious player as one of the online payment vehicles of the future.

One of the principal attractions about accepting online payments is all about giving your customers choices. It is also all about capturing every sale you can. Web-based businesses that do not offer payment alternatives to credit cards are shutting out millions of consumers who either don’t own credit cards, or, who are nervous about using them online.

According to a recent study, web sites providing four or more payment methods other than credit cards have a sales conversion rate that is at least 12% higher than those offering just one payment option, namely credit cards. Translated that means that just by offering your customers more payment options, and doing nothing else, you can potentially bump your sales 12%.

Lets pause here a second, and look at exactly how you can set your site up to process credit cards in real time and *dramatically* increase your sales.

Capture 85% MORE sales by taking credit cards online

The simple truth is that you must take payment by credit card on your web site if you expect to stay in business. It has been repeatedly proven that if you do NOT accept credit cards on your site, you will realistically capture only about 15% of your potential market. Think that is too stark an assessment, just ask any successful online merchant.

The bottom line is that you have to make it easy for visitors to your web site to buy your products. Internet surfers today expect INSTANT access to information, goods, or services, and online customers as we all well know can be very impatient.

Another issue to consider is that an online business with only phone-in orders is not a good idea. If dial-up users have to log off of the Internet to clear up the phone line in order to call in their order, you can forget about doing a large volume of sales. Said another way, this method in the long run will probably prove to be too much work for a high percentage of your customers. Those who think it’s too much bother will be far more likely to surf off, and find one of your competitors who do accept credit card payments online.

Accepting credit card payments online will also offer your business many extra advantages:

It will allow you to capture the sales of impulse buyers, and

It will provide you with a fully-automated payment and tracking system.

The two main steps necessary in order to start taking credit cards at your web site will be;

1. To establish a secure server to process credit card transactions, and;

2. To set up a merchant account.

DO NOT PANIC...

At this point many readers are probably asking themselves "How on earth am I going to do this? I don’t even know what a secure server or what a merchant account is!"

Please do not worry…. the concept is really simple, and with just a little effort and patience, you will soon be taking credit card payments on your web site and reaping huge rewards.

1.) ONLINE ORDERING VIA A SECURE SERVER

For your site to be as professional as your customers expect it to be, it must feature a secure server that protects your customer’s confidential information. Just seeing that they are buying on a secure server will give your customers the confidence to buy from you over the Internet.

A ‘server’ is simply a computer that houses web-sites/pages/data, and transmits this information to people visiting your website. A ‘secure server’ is simply a computer server which can transmit confidential information such as credit card numbers without the risk of someone intercepting the transmission and "stealing" the information.

During transmission of this information, the data is kept secure through an encryption process. Encryption is constantly being updated, and it is only the very oldest web browsers don’t support encryption. You can find out more about secure servers by contacting merchant account providers.

This brings us to the next step in getting your site ready to accept payments by credit card, and that is selecting and setting up a ‘Merchant Account.’

2.) SETTING UP YOUR MERCHANT ACCOUNT

You will have a few different options when getting a merchant account. Some of your options are:

I.) You can get your own merchant credit card account with your own local bank

If you have a good relationship with your bank... and they don’t require a large security deposit, then it’s probably best to get your merchant credit card accounts through them.

You may, however, have to go through two different banks to process the major cards -- Visa, MasterCard, American Express, and Discover. This is because some banks only deal with two out of the four.

Another possible problem with local banks is that they may charge a very high "discount rate" or require a very large security deposit to open the account.

For those who don’t know what a discount rate is, it actually is not really a "discount" at all, that is just a figure of speech. A discount rate is the percentage that you pay on each customer transaction for the privilege of using credit card services. This ‘discount rate varies according to your credit rating, business history, and the amount of business your site is doing.

For example, if you have a discount rate of 2.5% and you make a credit card sale for $100, you will receive $97.50. The remaining $2.50 is the discount rate, and is paid to the credit card company.

2.) You can get merchant credit card accounts through a ‘broker.’

Getting your merchant credit card accounts through a broker has advantages and disadvantages:

a) They are web-based specialists in getting credit card accounts for online businesses, and, you can apply over the Internet.

b) They may have a higher approval rate than banks, and should be able to get you a discount rate of 2% to 3% -- even if you have been bankrupt.

Finding a broker is not difficult. Besides searching online, you can find plenty of brokers in the back of DM (Direct Mail) magazine. Be sure to do some research, and make sure that any broker you choose has a good track record.

There are lots of shady operators out there, so be careful of who you choose.

3.) You can hire a fulfillment house and use their credit card accounts.

If your company is doing only a few thousand dollars of business each month, a fulfillment house may be a good option for you.

A fulfillment house is a company that will...

a) Take your orders through a 1-800 number with live operators,

b) Process credit cards,

c) Provide some customer service,

d) Ship orders, and

e) Maintain your customer database.

These companies will also let you use their merchant credit card accounts to process your orders for a fee.

The downside is that the fee is usually a 5% discount rate instead of the 2% or 3% you would pay if you had your own accounts.

Because of the high discount rate charged by fulfillment houses, we recommend that once your business grows larger, you get your own merchant accounts and save money.

An excellent place to find nearly 100 fulfillment houses is Yahoo’s Fulfillment Services Directory. To get there, just click on "Directory" at Yahoo!'s homepage and then search for "fulfillment houses."

4.) Use a 'third party' merchant account provider

The upside of third party providers is that they can get you up and running quickly. They can easily set up your order forms, and will process your orders.

The downside is that they charge you a processing fee of 11% to 15% of the selling price -- depending on the volume of business you are doing.

While the discount rate offered by these companies is substantially higher than the other options, most do not require any setup fees, software, or security deposits, which makes them a simple and convenient option for some.

How to use PayPal to expand your customer base and increase your sales!

PayPal is an increasingly popular way to take payments online. Founded in 1998, it enables any individual or business with an e-mail address to send and receive payments over the Internet affordably, securely, and quickly. PayPal was purchased by eBay, and although independent, it is comforting to know that it is owned by the online auction giant.

It should be noted that PayPal has recently improved its service -- making it an even better payment alternative for your online business. Previously, customers had to set up a PayPal account before they could make a payment. HOWEVER, .PayPal has now changed its rules, and that limitation is no longer required. This improvement now makes PayPal much easier for your customer to use.

(For new users,) signing up for a PayPal account is now optional. This means your customers can complete their payments to you first… and then decide whether or not to create an account.

The need for an account used to drive people away, but by eliminating that requirement, PayPal has dramatically increased your potential customer share, and clearly made buying your product easier ...this step naturally translates into higher sales and growth for your business.

The giant of online payments, PayPal has an established network of over 64 million accounts, in over 45 countries worldwide.

Some of the benefits of using PayPal are:

1 It offers secure and private facilities! After setting up an account with PayPal, customers don’t have to give out their confidential information to every single company that they may buy from.

2 There is no need for you to set up a separate merchant account to take credit card payments. You simply have to set up a PayPal seller account. This option is extremely convenient and cheap if you are just starting out.

3 By using PayPal, your customers can choose to pay by credit card, bank account, or PayPal balance.

4 PayPal supports payments in US Dollars, Canadian Dollars, Euros, Pounds Sterling, and Japanese Yen, making cross-border, or International sales easier than ever.

5 PayPal is FREE for customers and really affordable for small businesses.

6. Set-up is fast and easy, and you can get started in minutes.

PayPal charges a discount rate of 1.9% to 2.9% of the transaction plus 30 cents per order, depending on your sales volume. The very best part is that there are no setup or monthly charges, and fees are only applied when a customer makes a payment to you.

To get started using PayPal, just go to their web site http://www.paypal.com and click the "Sign Up Now" button.

.....the rest is easy.

What payment method is poised to take the world of online payments by storm…. ?

If you want to get the edge on your competitors, you probably want to look into setting up your web site to allow payment by debit card. Here's why:

Debit card use is becoming hugely popular. In fact, according to AllBusiness.com (http://www.allbusiness.com), credit card purchases have been expanding by about 15% for the last five years, HOWEVER, debit card purchases have been growing at more than 50% per year. 50% growth… that’s an incredibly significant number!

By the end of 2005, credit AND debit cards are expected to account for at least 43% of ALL purchases in North America… proving that you can no longer afford to ignore customers who want to pay by debit card over the Internet.

Before we proceed further with the good news about how taking online debit card payments will help your business grow, it is just as important that we understand how debit cards work, and the different card types that are currently in use.

When a payment is made using a debit card, the funds are immediately withdrawn from the buyer’s bank account. Debit cards are not a “pay later" option, when a debit card is used the cash is paid immediately.

There are two basic types of debit cards:

1.) The first is a "signature-based debit card" that has a Visa or MasterCard logo on it. A person can use these cards anywhere VISA and MasterCard are accepted.

If you already take credit card payments online, you should be able to allow this form of payment as well. For good order sake, we recommend you check with your merchant account provider.

2.) The second type is a "personal identification number (PIN-based) debit card."

Most readers will be familiar with this type of card. This card is used primarily to withdraw cash from an ATM, but is also widely accepted at many offline stores. This card is used in the stores by swiping the card through an automatic reader, and then entering your PIN number. This makes this type of debit card impossible to use over the Internet... UNTIL NOW.

A company called UseMyBank has now developed software that allows purchasers to access their own bank accounts over the Internet, and pay for goods and services in real time

The process is nearly identical to paying bills online with your bank, and the money is immediately taken from the buyer’s account -- just like when using a debit card.

It works like this; If your customer decides to use this service to purchase a product, they will be asked to select their bank, as well as which account they want to pay from. For the buyer, this transaction is just like when using their debit card in the traditional way. The great news is that you are then immediately notified of their payment, and can then deliver your product.

One of the great features of this service is that your customers don’t have to give up any of their credit or banking information to you, giving them immense peace of mind, and making this one of the most secure options available.

Further, in addition to providing another payment option for people who don’t use credit cards for online purchases, this method also targets teens, who represent a huge market, but who often do not have access to credit cards.

UseMyBank is currently available only in Canada, but the company will be launching its service internationally including the USA any day now.

This is in fact excellent intelligence, and so by preparing now, you can stay ahead of your competitors by setting your website account up now, and providing your customers with the newest and easiest ways to pay online.

For more information about how you can offer your customers this payment option, just go to UseMyBank’s web site http://www.usemybank.com and have a look around. Signing up is very straightforward, and the site should be able to answer all of your questions.

One important service you should not overlook...

In addition to providing the online payment alternatives we have talked about, it is very important that you give your customers the option of ordering and paying offline. This will ensure that you capture the maximum number of sales possible.

Many people are still nervous about giving out confidential information over the Internet despite the safety afforded by secure servers, and thus a certain amount of customers will always want to speak with a live person.

Giving your customers the option of speaking with a "real" person can add credibility AND a human element to your online business. Another benefit is that the person taking the call can answer customers’ questions, as well as help "close" the sale by encouraging customers and giving them the final "push" to buy.

To make sure you are able to capture the orders of these customers, you should also...

1 Have a 1-800 number available 24/7, and

2 Offer a printable order form so customers can send it to you offline.

in summary........

If you are not set up to process credit cards directly on your web site, you are missing out on a HUGE number of sales. With 90% of all online purchases being made with credit cards, you literally cannot afford not to offer this payment option on your web site.

Making it easy for your potential customers to do business with you is essential to your online success. This does not mean you need to provide all of the payment methods available, but if you are serious about maximizing your sales, make sure you're taking advantage of the options that best suit your type of business and customers.

Don’t forget the key is just starting… even if you feel overwhelmed at first, you can begin with a simple PayPal seller’s account, and then grow and progress from there as your comfort level grows.

Terry Ellis

http//:www.RollDex.com

MERCHANT ACCOUNT LINKS:

TotalMerchant Services

PayPal.com

Charge.com

FREEMerchantSource.com

AllBusiness.com

UseMyBank.com