I am setting up to accept credit card payments. I narrowed down to 2 providers, AMS (advanced merchant svcs), OR paynet systems.

Thay both seem ok, paynet being cheaper, but AMS having authorize.net gateway for free (which I could use with an online shopping cart).
Anyone had any experience with either?
I would appreciate your sincere opinion. Thanks!

I know there a lot of merchant account providers on the Internet and I’d like to know their websites, but I really have no fondness of surfing to look for them. I’d like to see which ones offer really competitive rates. Suggestions please?

If I’m selling tangible goods as well as software, which merchant account provider will be able to help me?

The process of setting up online payment may appear confusing at first, but the hard work is choosing the right service provider.  In my search I spoke to everyone from sales agents to bank representatives and I now have a collection of contracts with very tiny print.  I put together a summary of the process, things to watch out for, and a comparison of rates. I hope this helps.

How it works: Credit Card Payment Flow

Customer enters payment information into our secure site (aka Shopping Cart/Checkout).

The payment details are sent to the Payment Gateway for approval. Gateway forwards the transaction to our Merchant Bank. Our Merchant Bank forwards the transaction to the Credit Card Issuing Bank for verification. Credit card bank verifies transaction and sends response code (Approve, Deny) back to our Merchant Bank. Our Merchant Bank forwards the response to the payment gateway. Payment gateway stores the results and response back to our online store. Payment information is displayed to the customer; i.e. “credit card was charged”, “credit card was denied”, etc.

This process happens in a matter of seconds.

Where Do We Get a Merchant Account?

Banks. Most banks use First Data Corporation network for their credit card payment process. FDC network clears about 80% of all credit card transaction. Here’s a list of banks that are FDC Alliance Partners.

Merchant Service Providers (MSPs). I refer to them as Vendors in this article. Advantages of MSP over Banks:

MSP have many bank affiliates and third-party account database, which mean higher approval rates (especially if your business is considered high risk). MSP will make recommendation on the best suited solutions or packages. Banks are limited on options. Better chances of negotiating lowers rates and contract terms with vendors than at a bank.

What are the requirements?
Requirements vary depending on the provider and the amount of risk they are willing take. Three vendors told me they only needed a Tax ID or SS#, business checking account, and an address (which is not completely accurate). I later found out that the vendor submits our application to the underwriter and the underwriter will request additional information for approval. Most underwriters will ask for both application and website information as follow:

The Applicant & Business Info:

Applicant must be a principal owner of the business Business License (Tax ID) or DBA (SS#) Checking Account Address Driver’s License and Contact Info of Principal Credit check – for new business, the personal credit history is a influential element

On the Website:

Must be a live site Company name or DBA name on the site Shows Product and Price Terms of Service Return/Refund Policy Shipping Methods Privacy Policy Contact info for support (email, form, etc.) Working Shopping Cart/Check out page Secure

Alternatives Service Providers
Alternative payment service such as PayPal, Google Checkout and Amazon FPS are becoming more and more popular with new small businesses. These companies provide packages that fit most business model, they are simple to implement, low cost, and you can get started almost immediately.

RATING AND RATES

Read the Tiny Print
Vendors use the same pool of financial institutions and gateways. It is a very competitive and lucrative market. They make money from markups to the fees, and additional service charges. In my talks with vendors, only if asked, did a few of the reps disclose the additional costs. One rep told me to read the contract carefully, but he can’t give me the contract or discuss rates until he has my application.

Varying fees and rates can be applied to specific card type (MC, Visa, AMEX, Discover, personal, business, and rewards card). The industry term for this is Qualified vs. Unqualified cards (unqualified having the higher unadvertised rates of course). Read your contracts carefully, especially the footnotes.

What’s important?
Keep in mind rates are not fixed, most companies can change the rate with 30 days notice. Finding a service provider with a solid reputation, flexible policy, provides good customer service, and 24/7 technical support is more important than the fees. An indicator of a good vendor is transparency into their company and if they ask in-depth questions about your business.

New Business Recommendation
For new a business with unknown sales volume, the per transaction rates may not make a difference early on. I might go with PayPal or Google Checkout for a few months just to collect some information around sales. Because there is no start-up cost, no monthly fees, an immediate sign up and use process, and low development time, there is very little risk and out-of-pocket cost. The only disadvantages are that customers will be redirected from your site during the transaction and the possible perception of not being as ‘professional’. That said, until you understand your volume, the flexibility and ease are the way to go.

If you run a small company, similar to several ones on the net, there could be a considerable reduction in your profits if you don’t make a prudent choice  while deciding on your internet merchant account provider! This is equally true of larger concerns.

Lara Coleman, who sells software downloads on the internet, ended up with less money  than she had bargained for, after she settled all her dues.

So Lara met with her accountant, Bill, at their review meeting, annually. Bill showed her how she was paying more in fees, and how her present internet merchant account was harming her, with its terms and conditions.

If you own or have ambitions of starting an internet business, you need an internet merchant account to receive money from your clients.

Buyers on the net employ their cards to pay for what they bought. This is routed by means of a payment gateway, on your internet site. This gateway makes possible communication between the site you purchase from and the credit card processor, by transmitting details of what is bought and on the card.

Make certain that you choose a provider who will do what is necessary to unite the merchant account, payment gateway and your website.

Credit card transactions are fraud prone, if the payment gateway is not a secure environment. So, find a established provider who will make sure the payment gateway is secure.

Getting down to brass-tacks, all companies have fixed and variable costs. Nearly all expenses, whether rental or payroll, are not under your control. But,  how much you spend on you merchant account is within your control.

These costs can start with the payment of a fee to verify your request for their services.Ignore any internet merchant account for which you have to pay when you make a request.

In addition, almost all providers bill you between ten to twenty five dollars as the minimum you have to pay; you have to pay this, even if you don’t sell anything that month.

If the provider is adamant on your taking a long-term contract , look for someone else. In doing this, you can escape paying an agreement fee in the beginning, and a cancellation charge ($200-$500), in case you  decide to opt out before the expiry of the contract period.

There are also some providers who require a membership fee be paid. This is also known as a risk assessment fee and varies between $30 and $300.

We would recommend you to pick a provider who does not ask you to pay any of the fees just mentioned .

Nearly all providers impose a transaction fee of $0.25  on each credit card transaction processed . The varying component, termed the discount rate, usually ranges from 2.25% to 2.40% percent on all transactions. If you can find a provider who charges below 2.25%, you would gain a lot, in the course of your business.

Further, you also have a monthly statement fee or a bank fee.   Avoid any provider  who charges more than $10-$15. Further, beware of other concealed charges, such as a charge on refunds processed.

Small businesses typically  have a thin profit margin, especially after you provide for the fixed expenses. As you have seen, lots of providers compel you to sign a long term contract  and charge unwarranted fees,  like,  fees when you enroll or discontinue, and overcharge on transaction fees and discount rates. Therefore, what profit will be left, if a large share of it is spent as your merchant account costs?

And if you operate a larger business online, it makes sense to choose the right internet merchant account, get the best deal, and increase your profits.

If you are about to start doing business online, it is imperative that you find a way to process payments securely on your website. Your first instinct might be to get a quote from your local high street bank, such as HSBC or Barclays. However there are a number of  Internet Merchant Account providers that charge smaller fees and offer secure payment gateways. Let’s take a look at five of the leading Internet Merchant Account providers in the UK.

Durango Merchant Services

If your credit is not that great, this might just be the ideal Internet Merchant Account for you. They boast a 99.9% approval rating and their fees are still remarkably low.

WorldPay

This credit card processor has some of the lowest fees online and they integrate well with most shopping carts. They have legions of satisfied customers and they just recently announced a free MOTO payment processing option. World Pay is part of the Royal Bank of Scotland and has built up an excellent reputation as a merchant account provider.

Nochex Merchant Services

This is an online payment company that specialises in payment solutions for smaller businesses and start ups. They do not charge monthly fees to their customers and also provide instant cash withdrawals.

PayPal

While PayPal is not technically a traditional merchant account, they do offer good options for new businesses and people that cannot afford to open a merchant account. Most accounts do not incur any additional fees over and above transaction fees. As a bonus, PayPal performs automatic currency exchanges, making it ideal for global businesses.

PayPoint.net

As an online payment provider Paypoint.net can offer a vast array of solutions based on your business size. If you already have an online merchant account, their payment gateways are quite flexible, they have some of the best fees around, and their customer service is very prompt.  They also provide packages of complete solutions including an online merchant account and payment gateway and offer highly competitive rates.

These are just a few of the payment processing options that are available to UK merchants. Lloyds of London also offers a good processing plan and there are several other smaller banks that are willing to work with small or new businesses. When deciding which type of Internet Merchant Account is right for you, remember to look at processing fees, monthly fees and whether or not they will hold your money in escrow.