We can all see the growing popularity of the use of electronic payments vs. check payments. Knowing this, make sure you choose a company that provides multiple payment options, allowing you to offer your product or service to customers looking for convenience and security when making payments, while keeping your own cost levels in mind.
Direct Payment via ACH
Getting paid electronically via ACH gives companies quicker access to funds, as customer payments for purchases of goods or services are debited directly from their bank account. The ACH solution also allows companies to collect recurring payments, further automating the payment process. Best of all, fees associated with ACH payments are lower compared to credit card fees. Card Payments – Opening your own merchant account to process prepaid cards, debit cards and credit card payments can be a complex and time-consuming process. Choose a payment processing company that offers these payment options to eliminate the need for your own merchant account. When making that choice, it is very important to select one that follows PCI security standards. Store Funds
Many of today’s innovative business models require the ability to create stored value accounts or reserve accounts for customers. Some businesses choose to store funds in their corporate account, but this option is fraught with regulatory risks. Customers also face the risk of completely losing their funds if the company becomes insolvent. Integrating with a bank to create individual customer accounts is an option. But not all companies have the time or the financial resources for bank integration, and those who successfully integrate may become dependent on bank technology limitations, the banking system and legal/underwriting hoops potentially hindering future innovation.
A payment processing company that offers this service is a viable option. In addition to looking for a provider that is experienced in trust/reserve account management, make sure they also have the infrastructure to support your company’s need for the creation and management of these accounts.
Disburse Payments
Depending on your business model, you may also need a way to disburse or distribute payments. This could include payments to an affiliate, a vendor, a retail company, another business entity or a consumer. Some companies make do with manual disbursements, but that process soon becomes expensive and ineffective as the company grows. Look for a payment processing company that can offer an automated solution and provide a variety of ways to disburse these payments. The provider should be able to offer the following services:
Disburse funds by ACH, check and wire transfer Split and transfer funds without the need for bank integration Flexibility in accommodating any complex disbursements Compliance
Regulations involving payments have changed significantly, requiring business owners to determine if their business falls in categories requiring additional licenses to enter the marketplace or even remain in business. Significant changes include state money transmitter license requirements, as well as requirements surrounding registration with the Financial Crimes Enforcement Network (FinCEN). Obtaining and maintaining these licenses is an arduous, expensive and time-consuming process. This is time and money that should be spent growing your business. A practical option is to consider working with a payment processing company that is registered with FinCEN as a Money Services Business and has money transmitter licenses, allowing them to compliantly receive, store and disburse payments for companies and consumers all over the United States.
API
If you’re convinced that working with a provider of payment services is the best decision for your company, make sure your choice of payment processor also has the ability to honor the brand you’ve built and the relationship you’ve nurtured with your customers. Choose a payment processing company that can offer API integration capabilities that work with your existing platform so it remains in the background, allowing you to continue to be the brand and the company your customers know.
Many providers of payment services offer one or two of these capabilities. However, a single payment processing company that offers a compliant and comprehensive payment solution is the best partner you can have as you grow your company.
Questions You Need Answers To Before Choosing A Payment Processor
Regardless of which companies and/or banks you may interview as prospective merchant processors for your credit card payments, be sure to ask the following questions:
1. Find out the total Setup Costs involved.
Confirm specifically what the grand total upfront costs will be, including any initial costs that you will incur during the first few months of processing.
2. Find out the total Monthly Costs that apply.
In particular, you will want to ask about any “monthly minimums” that might apply. This can often add $20-25/month in additional cost. Be sure to ask “if I processed $0 in sales, what would my grand total monthly billing amount be?”
3. Find out if there is any Annual Fee or Annual Cost.
Some processors charge an annual fee after just the first 1-2 months of service. Others charge fees as high as $95-$150/year and place this in the fine print of the contract.
4. Find out the Per Transaction Costs in Detail.
You will want to make sure that you understand the “Per Trans/Item” costs as well as any AVS, batch header or gateway per transaction items. For example: PayPal seller fees vary based on the type of transaction. To easily calculate PayPal fees you use this simple calculator.
5. Ask what “Downgrade Fees” apply.
It is not uncommon for some accounts to have 3 Tiers – Qualified, Mid-Qualified and Non-Qualified. Unfortunately, there are often *many* transactions billed out at the Mid-Qualified level which can significantly impact your total cost. A 2 Tier program is thus preferable but be sure to ask what % of transactions are billed at each level statistically.
6. Ask how Chargebacks & Risk Management issues are handled.
This is a *critical* operational area that effects many merchants and any company should be able to tell you in great detail how it handles these kinds of issues. For instance, do they automatically notify you via e-mail? Or merely mail out rebuttals in U.S. mail which can delay your ability to return a rebuttal?
7. Do your Due Diligence and see what other merchants have experienced using that processor.
Remember, the best predictor of future results is a processor’s current track record with the majority of its merchants!
Sometimes, the answers to these questions may surprise you. There are a huge number of businesses that just “go with their bank” for merchant processing and end up paying the cost. Just as you shopped for bank accounts you must too shop for merchant processors.
Getting Acquainted with Merchant Accounts and Payment Gateways
What is a merchant account provider?
It is a bank or company that allows merchants to accept electronic check payments and credit cards through the website they own and over an IP (Internet Protocol) connection. For many years, account providers have been managing the submission of payment transactions to the processing networks on behalf of merchant customers through retail merchant accounts or any suitable type of account depending on the nature of the merchant’s business. These companies let merchants settle and manage credit cards and electronic check transactions through websites, retail stores, call centers and mobile devices.
If a merchant wants to connect his web site to a payment processing network, it will be a difficult process and one that is beyond the expertise and technical resources of most online businessmen. That’s why they need to connect to a certain payment gateway. Some companies provide the complex infrastructure and security needed to ensure fast, secure and reliable transmission of transaction data. It also manages the routing of transactions just like a credit card swipe machine. They use the internet instead of a phone line.
The good thing about this is that most payment gateway companies, otherwise termed as payment processors, are available 24/7 for processing transactions. They also offer some value-added services to help merchants in handling their businesses and protecting themselves from fraud. Plus, they let merchants add their Verified Merchant Seal add to their websites for free to help build consumer confidence.
If merchants want to manage their transactions, configure account settings, generate reports, view account statements and more, they just log on to a secure website called the merchant interface. This is because the payment gateway is a hosted solution, browser-based and does not require any software to install or maintain. Merchants benefit by providing their customers with secure, convenient, and reliable payment methods without the need to invest in the ongoing development, support and legal compliance of sophisticated in-house payment methods.
The feecalculatorbuzz tool is a PayPal fee calculator designed to quickly and easily determine fees for sending or receiving money, whether for domestic or international transactions.
If you’re somehow intimidated by the whole process of applying for a merchant account, let alone maintaining it as you begin to accept credit cards, don’t be. It only sounds complicated when you’re still not doing it. But once you’re actually in the middle of it while observing the benefits it brings to your company, everything becomes a breeze.
The need for a merchant account and credit card provider is essential, especially these days when most online companies are accepting credit cards. If you still aren’t, you could be lagging behind in the race.