(last updated March 29, 2011)
Finding a merchant account for your online biz can be a real pain in the “you know what”
I just want to share a few things that i’ve come to realize are pretty important in a merchant account… so that when you are researching options you can make sure to get what you want (and need!)
A virtual terminal is a back office area that allows you to enter in orders manually. This is especially important if you plan on receiving any orders via phone or fax, otherwise all orders will have to be entered through the front end. You can also use your virtual terminal to process refunds, check on balances and other admin type things, make sure your merchant account offers this.
The recurring billing option allows you to enter in a repeating charge. ie: for a monthly coaching fee. With a recurring billing the monthly fee will be charged automatically each month, vs. you having to remember. Very handy! This feature is also available in many shopping cart systems.
Fees to expect
See a list for the folloing “typical” charges you may see. Be sure to ask about these fees when applying, and how they apply (or not) to your situation.
• application fee
• setup fee
• monthly fee
• credit card (discount) rate
• per-transaction fee
• statement fee
• monthly minimums
• gateway fee
• minimum term contracts that you cannot cancel without penalties
• rolling reserves
Some merchant accounts will require that they keep a percentage of all sales for a set amount of time. For example, my old merchant account kept 5% of each sale for 6 months. After 6 months the 5% was released and deposited into my bank account. This reserve is in place to cover any refunds that you may have in the future, and will quite often be waived for people with previous merchant account history. This isnt a bad thing, just be aware that some merchant accounts have this requirement and to ask up front.
This is a tricky one to watch out for! How often will money be deposited into your bank account from your merchant account? Weekly is great and pretty standard, daily is even better. However some merchant accounts may only do monthly deposits, which mean that you could be waiting up to 4 weeks for payment – not good. Be sure to ask how often money will be deposited into your account.
This is optional, but very handy depending on your location. If you do business outside of your home country you may want to get a merchant account that can be used in various currencies. For example, I live in Canada but sell alot of online products to people in the US, so I will want to get a merchant account that offers US dollars.
Is the Gateway included?
In order to ‘attach’ your merchant account to your online shopping cart system you will need a gateway. Many merchant accounts will have a gateway included in their package already, so be sure you check that a) they include a gateway and b) that gateway is compatible with your shopping cart system. If your merchant account doesn’t include a gateway ask them if they can refer you to a compatible gateway system.
The two merchant account systems that I recommend are:
I’ve personally used both of these systems, and they also both work with the Infusionsoft* system which is the shopping cart system I use/recommend.
Do you have anything else to add from your experience with merchant accounts? Please comment below…
* In the spirit of full disclosure there are affiliate links within this article, as indicated by a lovely little * beside the link.