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Finding the Right Online Credit Card Merchant?
"I have personally used Cybercash and Ibill for business to consumer type of online transactions and have successfully brought these into production use, but I am about to start a new project where this decision will be needed and would like to know... Which online merchant do you use and why? Also, which merchants do the major players (Amazon, et al) use?
Please spare me the hype about B-2-B and the 2/5/7 trillion dollar industry that it will become. It may become a big deal, but you can bet that the major companies are the ones who will be landing these types of contracts, not you and me. I still think the B-2-C industry is viable and there are many facets that have yet to be explored. There are opportunities for individuals and small companies to "merchantize" Web sites, as long as it is not prohibitively expensive from the online credit card merchant."
What can I say? I think you're wrong in assuming that small B2C sites are viable in the long term, and you're going to be wasting your time unless you're offering something that cannot be found elsewhere. And let's face it, this isn't likely. Most specialised market sectors already have thriving international mail order areas, and you'd be competing with those.
Only a few of the major players around today will be the ones to survive the B2C backlash which has begun. Amazon probably will since it has a decent customer base and a good brand name, but smaller sites, such as yours I assume, will find it hard to compete against larger and/or more established competitors that can make savings you cannot.
On top of that the security issue is a major one. As a consultant I've often seen companies involved in managing online financial transactions that could be hacked into by my little sister, let alone someone who knows what they're doing. To be truly secure you either need to go with a large, established player who has a decent reputation or, even better, develop your own. Not easy, but secure and you know nobody's going to be selling your customer's information but you.
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Jon E. Erikson
Jon Erikson, IT guru
Does anyone know of a decent merchant that will handle transactions well in uk pounds and preferably with support for euros too?
I'd like to find one that isn't for the sort of 'dumb webadmin' where they run all your shopping carts for you. I want a proper one that I can invoke from my own server, presumably by https that will leave my site feeling proper and professional.
Certainly I'm not overly impressed with some credit card systems online. The worldpay one is ugly and kept spawning new windows and using javascript refresh's to the point that even I (who regularly have about 50 windows open) was struggling to keep the plot. I've had other ones that dont properly track users and due to the fact that my modem connection broke midway through ordering they billed me twice (even though i was using a fixed IP dialup at the time i think). Surely that sort of inefficiency is inexcusable - especially considering 5 months later they STILL haven't refunded the money. Not wanting to name names there are better places to get domain names like www.freeparking.co.uk.
bizrate rates online merchants and has an extensive database.
1) traditional merchant account (about $30 a month) + lower discount (% of each charge, usually 1.5%-3%) + per-charge flat fee ($.25 to .35).
All the major players have decent methods for integrating their system into your site, everything from hosting the whole shopping cart to various flavors of "your cgi page calls our cgi page, we do the transaction, we redirect back to some cgi of yours with the results". The hackery involved is trivial.
After having problems with one provider who had an annoying habit of randomly double-charging customers, I settled on Anacom and they've been flawless. They've also been around a while.
Option 2 - charge without a Merchant Account. You pay about 1% more on the discount, but unless you're doing $3000 a month in sales or more, you still come out ahead. ProPay seems to be the leader here, but I have no personal experience with them [some of my SelfPromotion.com users have recommended them, though.
3) Indirect, using a web-bank service like PayPal, which just announced a business service. The rates seem a little better if memory serves, but the downside is that people have to be paypal users to use it. My advice is that you should offer PayPal as an OPTION along with (1) or (2) above.
Best,R
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My company is a small company that has been processing credit card for several years now. We have the same certifications as a Cybercash/Verisign but we're much much small and can charge much less.
There are a number (over a dozen) small companies like ours that offer credit card processing and do it better (in many cases) than the big guys. You get better rates and MUCH better customer service will a smaller company.
There are other things you need to watch for that credit card merchant providers don't tell you:
1) Many merchant accounts have a ratio of USA to International credit cards they can accept (example, you must processes 5 US cards for every 1 international card to maintain the lowest rate).
2) There are always hidden fees, make sure you understand them. The common fees including a minimum monthly amount, statement fees, address verification, voice processing, chargeback research, mailing fees, keyed vs non-keyed rates, etc....
3) There are a lot of people that advertise low merchant rates but they are quoting "Merchant is present, you see the card and you have checked the person's ID" rates. The fine print might state that the "MOTO" (mail order-telephone order) rate is a full percent higher (and more in some cases)
4) Make sure your gateway uses some form of encryption. Many gateways out there, including some very popular systems, provide binary files for their API and you have no way of knowing how it works and if it is secure or not.
Plug:
We private label our API seprately and as part of our instant e-commerce builder at http://www.n2plus.com. Lowest rates around. E-mail me directly if you have more questions, I've been processing credit cards on the net for 6 years as a business.
This is a much more complicated question than it sounds like.
As several people have noted, you basically can choose to get your own merchant account, or use a third party to effectively resell your goods or services. That's the easy part.
Getting a merchant account for an online-only business is very difficult. If you've been in business for at least two years in the real world, it will be easier.
However, I would strongly advice against the merchant account approach unless you're willing to provide real live customer service at least 12 hours a day, 5 days a week. 24/7 is better.
A key metric that credit card companies look at is chargebacks. Chargebacks are when a consumer disputes a charge, claiming either that they didn't make the charge or that the goods/services were not as advertised.
If you go over 1% in chargebacks, watch out. If you hit 2%, you're all but certain to get your merchant account revoked.
That sounds easy (just run an honest business, right?), but it's not. Credit card companies exist to serve the consumer, not businesses. Many consumers have found that it's easy to get free stuff by disputing lots of charges, especially internet charges. The burden of proof is on you to show that every one of these people did actually get and use your goods/services.
Hopefully I've convinced you to use a third party processor. Now, the question is who. This comes down to three key elements:
1) Are you selling goods, services, or both? Services include web site access ir intellectual property.
2) Are you in the adult entertainment industry?
3) What monthly transaction volume do you expect to do?
The first question is critical. Paypal only does tangible goods, Ibill only does services. You've got to find a processor that handles your kind of transaction.
The second question is important. Many processors refuse to to business with adult entertainment companies because, let's face it, many of those companies are unscrupulous, unprofessional, and untrustworthy.
Chargebacks are typically higher with adult content, both because many adult businesses are misleading ("FREE! Just give us your CC# to prove your an adult" often turns into a $59.99 charge), and because consumers are more likely to dispute adult charges ("No, Honey! I would never have signed up at cumslurpingteens.com! Someone must have found my credit card on the internet! I'll dispute the charge!")
And, finally, the third question (processing volume) will determine how seriously you are taken by your processor. If you can pull about us$20,000/month or more, you'll start to get some special treatment which will reduce chargebacks and generally make life easier. If you're going to be doing this kind of business, ask your processor if they have a premium accounts department, and what the threshold is to qualify.
Ok, so we've covered picking a processor based on your needs. Now let's move on to things to look out for:
1) Retroactive fees/chargebacks. One of the large processing houses really screwed its clients over a year or two ago by imposing huge, retroactive fees. Basically the processor (DMR, if I recall correctly) got in trouble with Visa for too many chargebacks, and Visa levelled a multi-million dollar fine, as specified in the merchant contract. Rather than eat this fine, DMR passed it on to their clients -- by withholding their revenue until they had met their portion of the fine. Ouch! It was ugly. Check to make sure your processor won't do this. Look for language in the contract that is fishy.
2) Financial stability. See #1. Do some research to ascertain that the processor is stable, pays on time, doesn't bounce checks, etc. Ask for references, how long they've been in business, etc.
3) Internet connectivity. If people can't get to your processor, they can't pay you. Is your processor colocated on both the east and west coasts at a Tier 1 provider? Or do they have a 384kbps frame from Joe's Internet Service in Milwaukee?
4) Internet political considerations. Ibill has been in several well-publicized scrapes with the RBL, but it looks like that may be over. That probably means the RBL will turn their attention to other processors. Much as I think the RBL is a bunch of power-hungry thugs, they bear paying attention to. Check that your provider has anti-spam policies, doesn't specialize in hosting spammers' accounts, and ask if they promise to capitulate to any demand the RBL may make. It's ugly, but there's not much you can do about it.
You'll note that nowhere in here do I mention rates. Expect to may almost 15% for a respectable processor that also handles customer service. Yes, that's a lot. But it's cheaper than having a full time employee to answer the phone (Visa and MasterCard merchant account contracts explicitly say that real live people must be available by phone). As volume increases, you'll pay less. But it's worth it at 15%.
Hopefully that's been helpfull. I have a lot of experience in this area, and would be happy to share more specifics. Drop me an email if interested.
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