ETD: 873 SPECIAL REPORT - Merchant Accounts
E-Tailer's Digest
etd_post at gapent.com
Thu Mar 31 12:07:51 GMT 2005
E-Tailer's Digest --- Everything for the Retailer
Issue #0873 March 31, 2005
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] SPECIAL REPORT - Merchant Accounts
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[1] Greetings.
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Hi All:
The response to the Merchant Account post has been so great, that we are
dedicating this issue to one topic - Merchant Accounts. My thanks to all
who contributed this valuable information. Folks, this could be one of our
most important digest, if you sell retail.
We welcome your comments on this topic and any other topic that would be of
interest to list members. You don't need the answers - ask the question,
which is how this thread started. Topics of interest to list members can
be classified into:
A. Growth - differentiation, sales, advertising, marketing, e-commerce,
merchandising, trade shows & seminars,
B. Operations - merchant accounts, security, logistics, shipping, taxes,
accounting & legal,
C. Technology
D. Customer Service
Let's hear from you, so we can get more valuable information for our list
members.
I'll give you the start of another topic. Last week we updated the ETD
site and included some new resources including advertisements from list
members. Last night I searched for a particular keyword and was shocked to
see that E-Tailers Digest came up in the top 10 (1st page) for that
keyword, whereas the company wasn't listed yet! So, what drives the search
engines and how does one improve your listings? Are links to sites
critical? Are paid ads valuable?
Tell us about your business which will remain for posterity at
our "Members: Who Are You?" site. This is a courtesy to our members who
contribute to our forum, and not merely a way to advertise for
free. Anything to do with the retail world, i.e., supplier, retailer,
consulting, etc. http://etailersdigest.com/resources/members/index.htm And
we have a form there for you to tell us about you. As I said when I first
proposed this idea, we have "known" each other for a long time, yet we
often don't know anything about each other. So, tell us who you are and
what you do.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Merchant Accounts
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One of the things that's really important for beginners to know about
merchant accounts, is that it's important to compare prices and read all
the fine print before signing on the dotted line.
Another important bit of information: If there's anyway to avoid it, don't
"lease" software or card swipe machines. Buy what you need outright. If you
don't, you'll get locked into a noncancellable contract and spend a lot
more than you would if you bought the software or equipment outright.
We have a number of articles about the basics of getting a merchant account
here:
http://www.businessknowhow.com/money/merchant.htm
For those who already have a merchant card and see their business growing,
it's a good idea to check and see if there is any limit on the dollar
amount of transactions you can process a month. There often is, and if you
don't ask to have it raised, you can wind up hitting the limit before the
end of the month and losing sales because of it. The time to ask about
having your limit raised is a couple of weeks before you hit the limit for
the month.
--Janet Attard
Business Know-How Small Business Resource Center
http://www.businessknowhow.com
Free newsletter: www.businessknowhow.com/subscribe.htm
+++ [Next Post] +++
Besides banks, their are other sources of securing a Merchant Account.
1. If you are a member of Costco
2. ISO - Independent Selling Organizations
3. Even your ISP may be a reseller of Merchant Accounts.
Since most e-trailers sell on the Internet, always tell your provider you
are a MOTO - Mail Order Telephone Order Merchant. If you tell them you
swipe the card and your customers come in to your store and you are really
a MOTO type business, and the provider finds out you do not swipe the card,
you will be black listed, loose your merchant account and your funds will
be frozen for up to six months.
The next issue is what is the difference between Swipe Card for Brick and
Mortar and MOTO. The fees you are charged. As a Swipe Card, here are some
general rates, depending upon your ISO your rate may be lower or higher
depending upon your credit capability and the underwriting that the ISO
performs on you. Remember these are general rates not in stone:
Visa - Master
Card Swipe 1.59% MOTO 2.29%+
American
Express 3.50%+ MOTO 3.50%+
There is also Discover Card and some other type cards available. But my
recommendation stay with Visa and MasterCard, with so many individuals
having Bank ATM/Credit Cards stay with the lower rates of Visa and Master
Card.
Also you should also understand that Visa and Master Card will charge a
higher rate for Corporate Credit Cards. There is also normally a
additional charge of approximately 30 cents for processing the charge, plus
you could be charged a Monthly Bank Statement Fee and Also minimum monthly
volume requirements. Plus also a monthly gateway fee to process your sales.
To get what some charges are, and Inovium Corporation is a reseller, you
can go to: http://www.electroncifunds.com and you will see a link called
Merchant Accounts and you can see the terms and conditions that we require.
The normal turn around for you to receive your payment is 48 hours. Now do
not count the day you post, if it is after 5 PM EST. That is the normal
cutoff. Also make sure you provide the ISO a blank check so they do not
make any mistakes.
Now here are some areas you have to be aware of: If you do not keep
records and you are sloppy, and one of your fine customers protest the
purchase and you get a charge back you will loose. Also Visa and
MasterCard really do not give a darn for the Merchant. They will always
take the side of the Credit Card Holder. Now here is the real rub, when
you get a charge back, besides the full amount of the charge, you will be
charged the discount rate plus a $25.00 fee. Beside that if you get a lot
of charge backs, guess what their is a good chance you will loose your
merchant account. You as the Merchant have to be careful who you sell.
If you get an order and you never sold to that person, and the order is
larger than your normal sales, and they want it by express delivery within
24 hours, it is a good chance you are being scammed. If you are a download
type entity and someone places a real large order, call your ISO /
Processor and to verify that the credit card is valid. Also if they are
buying a product, that say you normally sell only to B2B type customers and
this customer is a B2C be careful. Also if you are in the US and they are
in say London and you never sold be careful. Just because a card gets
approved does not mean you will get paid or if you do get paid in about 30
to 60 days you will have a chargeback. This is not to scare you, because
most of your sales are from legitimate buyers. It is the few rotten apples
that will hurt you and hurt you badly.
Besides credit cards,there is another way of getting paid and that is
through Electronic Check. This is another option but again the key
operative word is BE CAREFUL with any payment type. If you want to find
out how Electronic Invoice and Present Payment Services function go to
http://www.electronicfunds.com for a full understanding of Merchant
Accounts and Electronic Payments. Again do not be scared of these type of
payment systems, they have been around for a long time, the real key you
have to be careful when your process, don't get all hype with the Sale
especially if it smells wrong.
Yours truly
Jules Kaplan
Inovium Corporation
702-254-6385 FAX 702-926-9629
http://www.electronicfunds.com.
+++ [Next Post] +++
I have a couple of watch-outs! Last year we caught over $20,000 of
fraudulent orders, all from, or being shipped to Nigeria.
Telltales; Orders larger than normal, orders with the same product ordered
more than once, orders from a US address but being shipped overseas,
anything from Nigeria.
If you have a doubt about an order, call your merchant account service/bank
right away.
To get set up to take credit cards, call your bank first. If your bank does
not provide this service, we have a few listings for independent service
providers on our site: http://www.nmoa.org/sponsors/cc.htm
Tips for order taking: For the people that do not like ordering on-line,
make sure you have a toll free number on your product pages. Don't hide it.
--
Best regards,
John Schulte, President and Chairman
National Mail Order Association (NMOA)
http://www.nmoa.org
Tel: 612-788-1673
http://www.nmoa.org/schulte
+++ [Next Post] +++
I started my first Merchant account with my bank and it was painless. That
was 15 years ago. Today, I know the process is far more complicated with
so many options.
When it came time to change banks I could possibly have moved the account
but I opted to go with the new bank merchant account with a lower rate. It
has worked out perfectly. Since the bank that holds my merchant account is
my "neighborhood" checking/savings I always have an instant support system
if I have a problem.
I started with Visa/Mastercard but have since been given American Express
and Discover without a great deal of paperwork.
On an occasion, I tried to open a merchant account with a website shopping
cart deal and the paperwork was awesome and I got denied!
So if you try your friendly banker first, it could be the best way to go.
I am interested what others have found.
Patty Sachs
www.instantphotoframes.com
www.pattycakegreetings.com
www.partyplansplus.com
www.weddingplansplus.com
+++ [Next Post] +++
I'm a long time reader, find this list often helpful, and would like to
share some recent experiences with a client around merchant accounts and
setting up for online e-tailing. I'd like to start with a key piece of the
merchant account equation, the shopping cart.
First, my gig is helping smaller businesses bridge the information and
technology gap to use the Internet to support their business. To newbies
the Internet can be a financial black hole. Even with a big budget, it is
easy to get bogged down in technology. Basically I help my clients find
Hyundai level Internet solutions while most often they're bombarded with
Mercedes solutions. In plain English, my approach works great for
businesses new or young to the Internet, maybe not so much for businesses
with many years of Internet experience.
One of my recent clients asked me to help put her business online. She
sells direct to retail stores and wants to expand to sell direct to
consumers online. I pulled together a list of shopping cart software, set
them up, and we evaluated them at length. She wound up happily paying for
Pinnacle Cart. And she signed up with PayPal to handle her online
transactions. She also signed up with QuickBooks for handling offline
transactions. She should go live in a month.
But here's what intrigued me: the free open source carts (e.g. osCommerce,
ZenCart, others) did not meet her basic needs. And while WorldPay,
2Checkout, and other payment vendors offered good/great rates, PayPal was
very competitive. Given that PayPal is owned by eBay, my client felt PayPal
had more potential long term viability.
Other useful results from this client: she needed QuickBooks integration,
the ability to export sales data to her QB software. While osCommerce has a
plug-in, that cart turned out to be a nightmare to customize and change the
interface. Remember, my clients have little or no technical skills, not
even basic html. Another criteria she had, that many e-tailers probably
have, is the ability to either shut off registration or bunde registration
into the sales process, making the name, address, phone, email data fields
do double duty by populating the data tables for sales info and the
marketing info (used later to let customers know about specials, for
example). My client believes that customers might abandon their carts if
they have to fill out too many pages. Amazingly, a few of the carts we
tested did not let her shut off registration and one or two carts did not
bundle registration with the sales input form(s).
In the end, my client chose Pinnacle Cart because it has a very
user-friendly interface that non-technical users can figure out by clicking
around. It has a lot of functionality (like QuickBooks export, bundling the
registration process) and flexibility that can be modified by clicking
checkboxes and radio buttons.
I mention shopping carts at length because while merchant accounts are
important, it's the cart that has to work with the merchant account. And
not all carts are equal just as not all merchant accounts are equal. In
fact, my client found me through a relative after having had a few rip off
experiences with other Internet vendors, including sellers of merchant
accounts. My client figured that she could easily have spent many thousands
of dollars when only a thousand or so was really needed to get started with
more functionality. In her case, she wanted to spend less because this is a
test of whether or not she can expand her business. She can write off
$1-2,000 dollars but blanched at $4,000 plus.
The other point I would make about merchant accounts is that nowadays many
big banks like Wells Fargo offer rates similar to WorldPay and other online
vendors. So it is possible to get reputable, moderate cost merchant account
capability without all the hidden fees and flim flam I found with some
vendors. My client also found that even QuickBooks had a little flim flam
in their pitch to her, she had to ask a few tough questions to find out the
true cost of their services. So, bottom line, it is still caveat emptor.
Hope this is helpful. Feel free to trim if appropriate.
Tim
Tim Slavin
Red House Communications, LLC
http://www.redhousecommunications.com
http://www.reachcustomersonline.com
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