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For a number of e-Businesses, discovering the best way to accept
payments is a frustrating task. As the Internet is an instant medium,
it is highly recommended that a ecommerce website must accept
credit/debit cards and online checks as modes of payment.
In order to
accept credit card transactions, you require setting up a merchant
account with a merchant bank. As soon as you set up a merchant account,
an online processor can provide you with the software or gateway you
need to transact.
Selecting a suitable merchant account is considered
to be one of the most tough business decisions you make as their
existence has almost doubled and are now into more than hundreds. At
the time of choosing a merchant account, you should be aware of the
cost involved in setting up the account. Refer to the list below and
don’t forget to ask about each of these items before agreeing to
an account.
Application Fee
The application fee is compulsory so an
agent or bank can "research" you as a potential customer. Few firms are
more likely to repay this fee if your application is not accepted while
others won't. It is always advisable not to pay an application fee that
will not be refunded in case you are rejected.
Minimum Account Billing
This fee requires you to do a least amount of business with a merchant
bank. A majority of banks require a monthly minimum of at least 25
dollars in transaction fees. Anything less than 35 dollars minimum is
satisfactory.
Statement Fee
In case there is a considerable
minimum-billing need, then there should be no statement fee. Still, a
number of banks charge this to cover administrative costs. If you are
assessed a statement fee, it shouldn't exceed 10 dollars per month.
Charge Back Fee
In case a customer is not satisfied with their
purchase, can't get a refund, or is just looking for something free,
you may be faced with a charge back attempt. Under this, the bank will
return customer’s fund and debit your account for the full
amount. Always make sure to ask about your bank's charge back policy.
Most banks tend to be more loyal to cardholders than merchants so
protect yourself by preventing charge back fees.
Transaction Fee
This
fee, which is usually about 2-3 percent of the purchase, is assessed on
every transaction. If a product costs US$100, the bank would receive
US$2-3 for their services. While rates are relative to the nature of
your business, anticipated volume and your credit history, you should
never pay more than 3 percent.
Setup Fee
This covers administrative
work necessary to establish your account. In case you're charged an
installation or programming fee, there shouldn't be a setup fee. There
is a considerable amount of work completed to create merchant accounts,
so fees of US$50-500 should be expected.
At the time of approaching
banks or an intermediary about a merchant account, always keep in mind
the following tips:
1. Read the terms, conditions and anticipated
charges carefully. Don't sign anything until your questions are
answered to your satisfaction. Take time to understand exactly what you
are getting and how much you are paying to get it.
2. Do you require a
reserve account? It shouldn't be, but if you are a start-up Internet
business, have poor to marginal credit, anticipate low volumes or run a
"risk" business, it may be required.
3. How long before funds are
available to you? Ideally it should not take more than 72 hours from
the time an order or transaction is processed. Given below are some of
the options available with whom you can setup your merchant account.
Paypal: With a free PayPal account one can accept credit cards on your
website immediately
Click bank: It offers distribution of digital
products and has an instant affiliate network promoting your business.
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Handy Guides: eCommerce
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