Credit Card Processing
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If you have a product to sell, you need a way to process credit cards on your website. There are lots of credit card processing companies out there and they've made it relatively painless to integrate into your site.

Here's a list of the different kinds of fees they may charge and what they mean:

Merchant account fee: This is the fee to setup a merchant account, which is an account at some financial institution where your money gets deposited. Some credit card processors want to charge you upwards of $100 for this. It's a gimmick. A good company will roll this into their setup fee, which is closer to $20-50 and deposit your money into your existing checking account.

Gateway fee: This is the monthly fee you pay to the credit card processor. I've seen prices as high as $50/month, though $20/month is more common.

Transaction fees or "discount rate": These are the fees you pay per transaction. There are 2 kinds: (1) % of sale and (2) fixed. The percentage is often 1%-3% of each sale. A good deal is around 1.5% or less, though real-time processing of internet transaction is often closer to 2.5%. The fixed price is often 20-45 cents per transaction. A good deal is anything below 30 cents. So, if you find a deal for 2.5% and 30cents/transaction and a customer buys a $100 item from you, you'll pay $2.50 + $0.30 = $2.80 to the credit card processor.

Minimum fee: Some credit card processors require that you pay a minimum amount per month in transaction fees. If you don't, they'll charge you a fee or make you pay the difference. Check the minimum, and if you're not sure you'll meet it, find a credit card processor that doesn't have a minimum -- they do exist!

Statement fee: As far as I can tell, this is a fee some credit card processors slip in to ream you. I've seen prices as high as $20/month. Beware. This is just for mailing you a transaction summary every month. Most credit card processors just let you login to their website and download your transaction.

Setup or application or programming fee: This is just a fee for setting up your account.

Refund fees: Some credit card processors will charge you a fee if you ever have to refund money to a customer (say they return an item). This is where some of the shady operators make their money, so read the fine print.

American Express Setup Fee: Some credit card processors charge extra for processing Amex cards.

Questions to ask

  • How long does it take to get an account set up? They should be able to set you up in a day.

  • What are the fees? Setup, statement, minimum monthly, transaction fees, refund fees, fraud fees, etc. -- these can all add up, so check the fine print.

  • Do you have to write custom code or script to take credit card orders or do they provide you the necessary steps to do this yourself?

  • Do you want a credit card terminal so you can punch in the orders manually (if you're taking orders over the phone)?

  • Do you want the option of calling in credit card orders or entering them on a website?

  • Can you export transactions to your accounting software, like Quickbooks?

  • What kind of reports can you run?

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