Reviewing the Best Merchant Account Providers

As the economy has consumers increasingly aware of how fragile their finances can become, credit card companies are trying new ways to reach out to get people to sign up.

For example, 30 years ago most college students carrying a credit card probably were toting one that their parents had provided. No financial services company was going to grant them a line of credit back then.

Now card companies are setting up shop on campuses and offering things like t-shirts, ball caps, mugs, etc., as an inducement to apply. As a result around 75 percent of college kids these days have at least one card – though that number factors in those who carry one connected to their parents’ account.

Other attempts to lure in customers have yielded mixed results, like cards connected to celebrities. According to CreditCards.com few of those have stood the test of time.

There is a KISS Visa card for fans of the heavy-metal group that offers holders news about the band and discounts on KISS merchandise. And fans of Elvis have been faithful to the King’s Visa, but other celebrity-connected deals have come and gone.

At one time you could have Usher, Hulk Hogan, Reba McIntire, David Bowie, Hilary Duff or Billy Ray Cyrus, among others, on your card, but all of those are kaput.

There seems to be a disconnect when it comes to famous people and credit cards. We will use their perfume or wear their clothes but we really don’t want them in our wallets. It may be like the current American Express commercial where the young business person makes a bad impression by paying for a power lunch with a card that features the image of a cartoon super hero.

Not to mention that these days consumers tend to be more impressed by a great APR, airline/hotel rewards, gasoline discounts and other perks rather than a famous face.

And then there also is the roller-coaster ride of celebrity reputations. If there had been a Lindsey Lohan credit card it might have seemed like a good idea five years ago – today, not so much.

However, CreditCard.com is also reporting that a group that has typically shunned credit cards because of religious reasons, Muslims, is being wooed by some financial services companies.

A card that would follow the dictates of Muslim religious law is being marketing. Obviously it has some significant differences from the mainstream credit cards. Like instead of the variable interest rate, prohibited by their religion, Muslim customers would pay a set monthly fee, and their card would not allow the purchase of alcohol, tobacco and other products forbidden by Islamic law.

For more info on credit card processing please visit Cardaccept.com

With approximately two weeks left before the Aug. 4 deadline for submitting public comment, officials with the Federal Reserve are reporting a massive response from consumers concerning a proposed ban on certain trade practices in the credit card industry.

According to the Fed more than 19,000 comments have been received, which to date is the second-largest response in the agency’s history.

According to CreditCards.com, card industry representatives feel the number of responses has been artificially inflated by the widespread use of form letters provided by various consumer groups that did not require much effort on the part of people to file. Indeed, the Fed’s own site, citing the thousands of form letters, is only posting a representative sampling.

The credit card industry has not filed comments but is expected to do so before the deadline, which does not mean they have been totally silent.

“The Federal Reserve’s proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings,” said American Bankers Association president/CEO Edward Yingling in a prepared statement. “We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards.  In short, everyday consumers will bear the real cost of these proposals.”

 The proposal would, among other measures:

 Broaden the disclosure requirements on credit card offers of promotional rates

• Prohibit rate increases except in a narrow set of circumstances
• Expand the amount of time cardholders have to pay their monthly bill
• Eliminate two-cycle billing

“Credit cards provide a convenient source of credit for many consumers, but the terms of credit card loans have become more complex, which has reduced transparency,” Fed Chairman Ben Bernanke told members of the U.S. Senate Committee on Banking, Housing and Urban Affairs. “Our consumer testing has persuaded us that disclosures alone cannot solve this problem. Thus, the board’s proposed rules would require card issuers to alter their practices in ways that will allow consumers to better understand how their own decisions and actions will affect their costs.”

After all parties have been heard from and recommendations are made a decision is expected before the end of the year.

There is a lot of discussion in eCommerce circles about when a business is big enough to have credit card processing. Or that point where it is getting enough traffic to warrant merchant services. Or should it be tied to reaching a certain level of profitability.

While there may be a grain of merit in all of the above, those arguments assume that online credit card processing is something that has to be earned by a certain level of business activity. 

And none of these things take into account the perspective of the most important component in this whole equation – that being the consumer. And this is the element that trumps all of the above. 

The nature of consumerism is that they want something – most of the time they want it as fast as they can reasonably get it. While that trait may not work well in other aspects of social behavior there are many people who have made their success out of successfully meeting that need. 

As such consider your business as though you were the customer clicking on to your site for the first time. They have no idea how big you are, and they really don’t care as long as you can deliver the goods. And they are going to expect to be able to at least have the option to pay by credit card. 

Likewise, the issue of the volume of traffic on your site. Again, if you can give them what they want they really don’t give a fig if they are the 10^th person to visit, the 100^th or the 1,000,000^th. 

By now you can guess how they feel about your level of profitability. The reason this point is being stretched is because too often decisions are made about small Internet businesses that take into account what is going on in the mind of the owner, not the potential customers, and that can be a big mistake. 

Because while you may be waiting to reach a certain level of traffic, sales, profits, page views, etc., your customer simply wants their needs and desires addressed. And if you can take care of their needs often enough, the traffic, sales and profits will be there.

 
Which leads to the inescapable conclusion that you should strongly consider online credit card processing services before your business goes live on the Internet. And if you are reticent to do so, consider that many big online businesses became so because they had merchant account services when they were small. 

The more you are look at your business from the outside in, the better perspective you will have in making decisions that will take your site to where you want it to go.

Can you imagine being in a line 10 deep at a checkout lane in your favorite store, with your shopping cart full, only to be told that they are going to check out the first two people in line then close? Do you think you’d shrug your shoulders and come back another day? Or do you think you’d find a new place to shop.

Or imagine the elections later this year. What if your candidate won the election with 80 percent of the vote. Would you say he squeaked by? That he was lucky? Or would you think he beat the opposition like a drum?

Finally, what if you were able to find what you needed only 20 percent of the time at your local grocery store? Would you keep shopping there? You would probably find a store that did a whole lot better than 20 percent.

The rationale for all this talk about 80 and 20 relates directly to online shopping, and a compelling numerical reason that online business people need to add merchant services to their e-stores.

According to several online retailing studies more than 80 percent of all goods and services that are purchased over the Internet are paid for using a credit card. Getting back to the above analogy about an election, the consumer is voting overwhelmingly for e-stores to accept payments online.

Among the reasons cited most often as to why people like paying with their credit card are:

•    Credit cards make the transaction go quickly
•    Credit cards allow them to track their purchases easily
•    Using their credit card offers buyer protections/affinity points
•    Using credit cards lets them stretch the payments over several months on big-ticket purchases

Perhaps a better way to look it as an e-merchant is that regardless of the reason, they want to be able to use their credit cards when they shop online and they expect online business owners to comply with their wishes. They certainly believe that the customer is always right.

So if you are one of those business owners, and you want your online business to grow and thrive, why would you turn away 80 percent of potential customers? Because people can be impatient and fickle when they shop online – if they don’t find what they are looking for they know there are dozens of sites they can click over to.

Make the effort and add credit card processing. Your customers will appreciate that you listened. And that 80 percent who prefer credit card services is a pretty large amount of folks to make happy.

A large part of the decision as to whether an online business will add credit card processing has little to do with buying or selling as it does sound business practices.

Most people start their own business for very specific, personal reasons. Some have always wanted to try their hand at running a company. Some have thought they have cultivated a winning formula and wanted to see if it would work in the marketplace. Others simply wanted to create an extra revenue stream that might or might not turn into something fulltime.

However, what all online business people eventually realize is that having an Internet business does not, as the cliché says, make them their own boss. Because when anyone goes into selling goods and/or services they suddenly have as many bosses as they do customers.

Or to put it another way the owner of any business may be in charge, but it’s the customers that will keep the business going. No business is going to survive – no matter how smart the owner is – if what they are selling or the way they are selling it has no appeal.

If you need to put a more positive spin, you can be your own boss if one of your early decisions is to do what it takes to make the customer happy. And that leads us back to the addition of credit card online processing services.

Today’s Internet shopper – and that number grows daily – wants to find the option to pay by credit card when they shop in the virtual mall. They like the speed and ease of paying by credit card. And more and more they are looking at any site that does not accept payments online with suspicion – why would any business not have merchant services unless there was something shady going on?

So when you add credit card services it is one more weapon in your marketing arsenal; as much as having a domain name that is easy to remember, a hosting services that keeps your site up and running, great selection and competitive prices. Again, those are business decisions but they also have a marketing element.

And, of course, when you take care of your customers they return the favor by coming back to shop again and again. And several online retailing studies have established the connection between credit card online processing services and increased traffic on a shopping site, as well as its positive affect on repeat business.

It has also been shown, by the way, that being set up to accept payments online also helps in terms of sales. People who are shopping with their credit card tend, more often than not, buy what they came to your site to find, as well as additional items.

So there is a mountain of evidence supporting credit card acceptance, not only as a payment avenue for your customers, but as a powerful and multi-faceted marketing tool. In the end the final question might be – can you think of a sound business reason to ignore the positives and not have credit card processing?

When an online business owner is ready to make the move to add credit card processing services to their Internet site, they may have no experience to draw on. And often this can lead to a solution that isn’t in their best interest.

This is because they are tempted to place their merchant services with their bank. They are looking for some entity they know and are familiar with. It’s where they opened their business checking account, it’s the place that may have loaned them money to start their business, and they probably get some sound financial planning advice.

But here’s the rub when it comes to using a bank as an online credit card processing source – they are what many call a “jack of all trades and master of none.” Banks handle savings accounts, checking accounts, money market accounts, mortgages, home equity loans, investments, etc.

And while their merchant account capabilities are probably right up there, what they can’t offer is the same level of service, flexibility and cost effectiveness as companies that do nothing but credit card processing.

Some businesses have even been told by their bank that they are “too small” for merchant services. However, to a credit card processor, there are very few business entities operating online that can’t realize the benefits of being able to process credit cards.

The end result is that banks are not the best option for credit card processing. Just because they offer those services doesn’t mean they are the best place to get them for your online business.

A noteworthy company that is a leader in the credit card processing industry is Charge.com (www.charge.com). For well over a decade Charge.com has been helping businesses with their credit card processing needs. With that level of experience the company has been able to offers its services to businesses large and small, from bricks & mortar to 100% Internet-based companies. They can do this better than most other companies, even your local bank, because it is all they do.

Along the way Charge.com has shown that superior service leads to customer retention, and that has translated into a streamlined (and free) application process that has most businesses able to accept credit cards within 24 hours.

And their rates are among the most competitive in the business.

However, something that also speaks volumes about Charge.com’s reputation is that the company has been honored by Apple, Magellan, AOL and Excite for its business practices. It has also drawn positive reviews from NBC Internet, Yahoo and netcommerce.

Don’t worry about offending your bank by not using them for your merchant services. With the additional sales and profits that will come your way from doing business with a company like Charge.com, you’re going to need a place that can advise you on what to do with your financial windfall.

Today we’re highlighting the services of one of the leading providers of credit card processing services – CardAccept (www.cardaccept.com).

CardAccept specializes in merchant services that have helped online and traditional businesses in the United States to accept credit cards since 1993. The company provides the tools for secure real-time online ecommerce and off-line credit card authorizations.

The company has also been on the vanguard of merchant account providers who have not only made the application process easier, but more affordable as well – two moves that have made the benefits of credit card processing available to scores of online business people.

Concerning the latter, CardAccept has waived fees for items that other card service companies charge for, including:

• Merchant account application fee
• Setup fee
• Internet credit card processing software (includes Web terminal)
• Checks by Web/Phone/Fax
• Web shopping cart
• Programming charges

For those not conversant in the merchant services universe, waiving those fees can save a business a lot of money as some providers will ask – and sometimes get – more than $1000 for those goods and services. And that’s before the merchant has processed their first transaction.

When it comes to the fees that all credit card processing providers charge, CardAccept’s rates fall below under the industry average. For example the standard monthly statement fee ranges from $12 to $20 per month; CardAccept’s is fixed at $10 per month. While most charge 35-50 cents for a transaction fee, CardAccept is only 25 cents.

This can become a major issue for an online business person who may be looking at a processor that is advertising deep discounts or low rates. Those companies advertise artificially low “teaser rates” in their proposals, while the real, and often much higher, rates are buried in the fine print of the contract. Or, the low rates apply only to a specific merchant category, such as supermarkets or gas stations.

An additional advantage to working with CardAccept is that they handle all aspects of the business, meaning customers are never dealing with a third party. That means that the company can offer superior customer service because everything is under their direct control.

It also speeds up the process of getting funds into your account – usually funds are deposited into a business’ checking account within 48-72 hours, not once or twice a month like with some third-party processors. This also eliminates the practice of some third-party processors who withhold a part of the proceeds from each sale for up to three months to protect against chargeback’s.

When compared to the industry standard, CardAccept needs to be high on the lost of companies that any online business owner is considering.

As any online business owner who has made the decision to add merchant services knows, the decision is the easy part. Finding the right provider can be like trying to find a grain of sugar in the sands of the Sahara.

Most people these days naturally turn to the Internet to find potential suppliers, but type in “credit card processing” to any search engine and you’re going to get so many hits it will seem like there are as many providers as there are, well, grains of sand in the Sahara.

Which begs the question, how do you intelligently narrow down the field?

If you are lucky you’ll have some professional colleagues that are already doing business on the Internet who will be happy to share recommendations about their provider, and possibly some war stories about the companies they steered clear of and why they did so. These people are great resources, if you have access to them, because they have no vested interest in giving any company a good or bad review.

However, for the sake of argument let’s say you don’t have any networking contact that can help you here. Who do you talk to then?

Virtually every legitimate credit card processing company will be happy to provide a list of references that you can speak to. These are different from people whose testimonials you see on the websites. These are people who have expressed a willingness to be contacted about their relationship with their merchant account provider.

Take the time to speak to these people because, again, they are the ones who have experience with a particular company and can help you navigate through the decision process. They may have a little bias, but they will still be likely to offer more candor.

The next conversation to have is with someone from the company you are considering. Granted, this person will be connected to the sales force, but they should also have a wealth of information that will contribute to your final decision.

Some good questions to ask include:

•    How long have they been in business?
•    What independent entities have given them positive ratings?
•    What experience do they have with a company in your industry?
•    If their fee schedule is different – and more – than the competition, ask how they justify those higher rates.
•    And a great conversation starter is why should you sign with them?

And as much as you’re seeking information, listen to the way the questions are being answered. Listen for thoughtful answers that truly address your question. In the way your questions are being answered – do you feel they are truly trying to earn your business? And are they showing that they have taken the time to understand exactly what you need?

Any credit card processing company still in consideration after these three steps (networking with peers, talking to references, conversation with a company representative) is one that should seriously be considered for your business.

One company that fits into this description is Cardaccept.  In business for the last 15 years, Cardaccept has a proven track record as an industry leader.

Also of note, Cardaccept does not have any application fees, setup fees, fees for processing/gateway/shopping cart software, or technical support. The latter is available 24/7 – the same hours your online store is open.

And for most applicants, your application will be approved with 24 hours, with some processing their first credit card transactions in the same time frame.

For more information go to www.cardaccept.com

For anyone who has had their own business for any amount of time, they no doubt have heard the phrase: “To make money you have to spend money.”

A more accurate way to express that as it applies to growing your business would be: “To make money you have to invest money back into your business.” This is exactly what any Internet-based business owner is doing when they decide to undertake the expense of adding credit card processing services online.

If you’re a traditional retailer you can find a store in an obscure section of town with dirt-cheap rent. But you probably won’t get a lot of business because people aren’t in the area very often because it’s not a place they feel safe or enjoy spending time in. So that cheap rent payment is actually costing money in terms of decreased sales/profits.

That’s why you’d spend more for rent to be in a great location with lots of consumer traffic and a store people feel comfortable in. It costs more in the short term, but it will help profitability over the long haul.

And it’s not all that different if store just happens to be on the Internet. You still have to invest wisely to make sure your business is attractive to its customers by making their time on your site easy and enjoyable.

This is why it is important to take a look at the investment of adding an online credit card processing service — an examination that probes beyond the bottom-line price. You have to think more about what you may not be getting for the price some companies will charge.

And this might be a good time to make what might be an obvious point, and that is credit card processing companies, just like you as a business owner, are in business to make a profit. As such, you will have some cash outlays to make, but the trick is to make them wisely. And there are fees tied to having merchant services.

For example, the gateway fee (also referred to as an internet processing gateway fee) is going to be charged by all companies. The gateway refers to the payment gateway, which essentially is the secure path by which sensitive cardholder information is sent back and forth during the transaction.

While this is a cornerstone of your processing needs – and you want to make sure your customers can trust using their cards on your site – the established companies will price this around $15-20 per month.

However, there are some companies out there that will charge up to four times that amount! That begs the question – is their gateway is four times better? Four times more secure? A great rule of thumb is that when you see such a disparity in price you need to ask why. And if you don’t get a clear answer, ask again. If you’re still not getting clarity, move on.

Another fee to consider carefully is the monthly minimum, or what you will be charged no matter how many card transactions you process in a single month. If you expect to have a significant volume of transactions every month, seek a plan that has a reasonable fee.

But let’s say you sell genuine Civil War weapons that were crafted in France — the odds are that your transactions every 30 days may be in the single digits. In this case seek a lower fee.

The aim of this exercise is to urge to think about the additional of online credit card services in terms beyond just a bargain-basement price. Price-shopping is a good idea, but not if you aren’t getting all you need from card processing.

However, there some aspects of merchant account services where an e-business person shouldn’t be spending their money. Looking at Charge.com; the company does not have fees – often called “junk fees” – that several of its competitors do. Charge.com doesn’t levy a cost on submitting an application for card processing services, access to technical support, card processing/shopping cart software or set-up services.

At the end of the day the smart e-business person should look at what their business needs from a merchant services perspective, and then find a company that can meet those needs in a cost-effective manner. And without junk fees.

Periodically this site will review the offering of select merchant account service companies, highlighting the work of those that offer exceptional service. Today the featured company is SecurePay.

The company has been in business since 1997 and today serves thousands of eCommerce sites across the country with a variety of payment gateway solutions, both standard and customized for those with more specialized needs. They provide a necessary service to anyone operating a business online.

At this point there may be question: “What exactly is a payment gateway?” And there are cases where businesses are considering offering online credit card processing, but get intimidated by the jargon. They cruise various merchant service websites and feel they are going to have to learn a foreign language just to make the decision.

Any time someone is feeling information overload in a situation like this, a good solution is to break each feature down, one at a time, and explain it so the confusion can dissipate.

So today’s term will be “payment gateway.” Just like a gateway in a fence is the entrance to a garden, a credit card gateway is an entrance to your processor. Your card-processing vendor provides you with a means to communicate online with your credit card processor. A gateway is the equivalent to the hardware terminal you would find in your department store.

A more technical explanation is that a payment gateway is an eCommerce application service provider service that authorizes payments for e-businesses, online retailers, brick and mortar, etc. It is just like a physical point of sale terminal you find in any retail store. These gateways encrypt sensitive information, like credit card numbers, to ensure all information passes securely between customer and merchant.

It works like this. A customer orders something from a online store by pressing the “submit” button on the checkout page. The customer’s web browser will then encrypt sensitive information (credit card number and expiration date) so it can be sent safely to the merchant’s web server. This is done using an SSL (secure socket layer) encryption.

At this juncture the merchant passes the transaction details to their payment gateway, which involves another SSL to the payment server hosted by the payment gateway. The gateway allows the transaction to securely move the process to the merchant’s bank, which sends it to the acquiring bank that issued the credit card.

When the purchase is approved or denied the information passes back through the gateway in reverse order, completing the transaction.

In addition to making the transaction easier, gateways also provide the necessary security to curtail issues of credit card fraud and identity theft.

For specific information on SecurePay, visit: www.securepay.com.

The following is a list of basic terms that you’re likely to hear once you start getting serious about setting up a merchant account.

Cardholder: The owner of the card used to make a purchase.

Merchant : An individual or business that sells products or services.

Acquirer: The financial institution or other organization that provides card processing services to the merchant.

Credit Card Association: A network such as VISA® or MasterCard® (and others) that acts as a gateway between the acquirer and issuer for authorizing and funding transactions

Issuer: The financial institution or other organization that issued the credit card to the cardholder.

Credit Card Authorization: The process that ensures the person charging an amount to their credit card has the available credit to cover the cost of the purchase. An authorization also verifies the billing information.

Payment Gateway: A service that provides a network among merchants, customers, and financial networks to process authorizations and payments. A third-party supplier like GeoTrust usually oversees the service.

Processor: A huge data center that processes credit card transactions and settles funds to merchants. The processor is connected with a merchant’s site on behalf of an Acquiring Bank through a Payment Gateway.

Settlement: Think of this as the final step. It is the method by which transactions with authorization codes are sent to the processor for the merchant to receive their payment. Settlement is like an electronic bookkeeping procedure that causes all the money from completed transactions to be directed to the merchant’s acquiring bank for deposit.

Though more and more people are using their credit cards, very few truly understand exactly what happens when they swipe their card through a machine in a store, or key in their information when shopping online.

Indeed, the speed at which the process happens belies a great deal of activity that insures all parties are protected while business is getting done.

When a card is used in a store, it is swiped through a terminal that reads the magnetic strip on the back. The terminal then connects the acquiring processor to obtain authentication. The processor then sends the transaction to the card association, which submits the information for the authorization from the bank issuing the card.

At this point that bank either accepts or declines the transaction, sending the response back to the card association. Assuming there is an acceptance, the association contacts the credit card processor with the authorization and a request to deliver goods and/or services is sent to the merchant via a POS terminal.

The merchant then sends the card processing company what is called a fulfillment notification to permit settlement – which means the goods/services are delivered.

Then the credit card authorization information is sent to the issuing bank and the customer’s card is charged. This entire process takes less than 10 seconds.

Usually at the end of the business day the merchant settle their batch, at which time the acquiring processor finalizes transactions with the issuing bank(s), and funds are transferred to the merchant’s bank account.

When the transaction is over the internet, there are minor differences. After the consumer picks out what they want and bundle into a virtual shopping cart they navigate to the checkout page, where they enter their shipping and billing information. Their card information (number and expiration date) are entered on to a secure form transmitted over the Web using real-time processing software, which then encrypts the transaction to the acquiring processor for authorization.

The acquiring processor will then pass the transaction to the card association, which requests final acceptance from the issuing bank. The bank accepts or declines the transaction and notifies the card association. The association contacts the card processor with the authorization and the request to deliver goods/services is sent to the merchant.

As before, the merchant sends the card processing company the fulfillment-to-permit- settlement notice – meaning the goods are ready for shipping. The capture takes place as authorization is given to the issuing bank and the customer’s card is charged. Again, this all takes place in less than 10 seconds.

And again the merchant settles their batches at the end of the day and the funds are deposited into the merchant’s bank account.

The universe of the credit card industry has changed dramatically with the explosive and dynamic growth of the Internet. The prediction 30 years ago that our world would evolve into a cash-less society is now reality. In the arena of business the brave new world has arrived.

Our goal with this site is to provide a single-source on the Internet for information relating to the business of credit card processing. There is no shortage of merchant account service websites out there, but much of the information they offer is out-of-date, contradictory or tied to a specific provider, often narrow in scope, or worse—completely self serving. As such, those sites do not offer enough informative content to be as useful as they claim.

We’ll also review the top merchant service providers in hopes of offering a bit of direction to those companies and individuals new to the business world. Whether you operate a brick-and-mortar company or an Internet based one without a physical presence, adding the capabilities of a first-class merchant account provider is more than just a way for your customers to pay for goods and services; it is the new standard, a must have for any successful business. Remember, the credit card processing company you choose should also in a sense become your partner because when you grow, so do they. We’ll help you find merchant account providers that have your best interest at heart and not just their own.

And for those of you who are truly starting from square one when it comes to credit card processing, this site will allow you to find everything you need to know about accepting credit cards with your business. We hope to help you make an informed decision that will benefit your business not just today but in the months and years ahead.

Finally, if there is something you don’t see covered, let us know and we’ll look into it. If we can make this site better for you as an individual, we actually make it better for everyone. Be sure to bookmark this site and come back often as it will be updated frequently.