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If you are doing business online I'm sure you understand that you must accept major credit cards in payment for your products or services.

In fact, credit card purchases account for more than 90% of all online transactions. If you do not accept credit cards, you are really shooting yourself in the foot.

But go to your local bank and ask for a merchant account and you may be shocked at the difficulty and cost of getting one.

Rather than succumbing to scrutiny and large security deposits, consider using either a broker, or a third-party processor. Rates from brokers have been holding pretty steady, but third party processor rates have been dropping.

The following should help you decide which is a better fit for you...

Merchant Account Brokers:

A broker is simply a middle-man between you and a bank. While middle-men usually mean you pay more, in this case you are better off using the middle-man. That's because they are able to offer higher approval rates than banks, especially for online businesses.

Most brokers offer discount rates between 2% and 3%. This simply means the percentage of each transaction that you will be charged. For example, a 2.75% discount rate, which is pretty standard for Internet transactions, means that if your product or services sells for $100, your fee would be $2.75 per transaction. You also usually pay a 20 - 30 cent per transaction fee on top of that. So for every hundred bucks worth of products you sell, you pay roughly $3 to the processor.

Most of these accounts also come with monthly charges ranging from $19 to $29, plus fees for chargebacks (when a customer disputes charges on an item) as well as nominal support fees.

Additionally, most brokers charge a one-time setup fee ranging anywhere from $100 as much as $600. It all depends on the service you use.

Here's an example of a broker with competitive rates. But before you decide to go that route, consider another solution which is really gaining momentum online...

(More after this important message.)

Third Party Processors:

A third party processor is a company that passes your transactions though their own merchant processor. Therefore, you do not have the expense or normal hassles of applying for a merchant account. However, the rates are usually a bit higher than those offered by brokers. (But as you'll see, they are on the decline...)

Let's take a look at a couple third party processors and what they have to offer:

ClickBank and it's built-in affiliate force...

This is a unique service that caters to merchants who sell digital products and services. (For example, ebooks, software, etc.) What's unique about Clickbank is that merchants get a built-in affiliate force. In fact, they now have a network of more than 100,000 affiliates. Many of them could be willing to resell your wares for a small commission.

Again, Clickbank does not process payments for tangible goods, but it is a decent solution for real-time processing of services or digital products. ClickBank allows you to accept Visa, MC, Amex, and Discover.

The way it works is you add code to your site so that buyers go to the ClickBank site to make their secure purchase. Each time a product is sold, ClickBank pays you (and the affiliate, if any) that retail price less $1 + 7.5%. ClickBank has a one-time $49.95 activation fee, and no monthly fees.

Yes, their fees are a bit hefty as compared to a standard merchant account, but the built-in affiliate force can offset those fees with higher sales figures.


It's time to add Paypal to your site...

Did you know that one in three online buyers in the US now has a Paypal account? It's safe to say that Paypal has reached critical mass, and should be a payment option on your website.

Their new rates are very competitive with regular merchant accounts and many buyers seem to prefer using Paypal over other methods. Paypal also accepts International businesses, so if you are not US based, this could be your best choice for payment processing.

In the past I shied away from recommending Paypal because of their requirement for customers to sign up for a Paypal account before they could make a purchase. Now they allow customers to simply pay using their credit card without taking the time to get a Paypal account. Now that this obstacle has been removed, the service is quite viable for merchants.

With more than 56 million users worldwide, I recommend you offer Paypal as a payment option at your site, even if you already offer credit card payments via another avenue. You may even see an increase in sales.

When customers choose to pay by Paypal at your website, they can then pay using a major credit card, or with any funds they may have in their Paypal account. You then access the money whenever you want by withdrawing it from your Paypal account. They offer many withdrawal options including electronic transfer or check.

Well, that's it for today.

To your online marketing success,
Jim Daniels - JDD Publishing

* Did you find this information helpful? There's MUCH more like it at... make-a-living-online.com

P.S. A brand new web business tool hits the web next week. Watch for it, as I'm confident many of my subscribers will reap huge financial rewards with it. It's unlike anything you've seen on the web to date. (Sorry, that's all I can tell you now!)
 

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