Do you really need a merchant account?
Brief Overview
If you plan to sell product or services from
your website you will have to decide which of the available payment methods are most
appropriate for your situation. The types of payment systems are:
- Merchant Account plus a Payment Gateway (AuthorizeNet)
- Reseller Service (2checkout.com also known as 2CO)
- Payment Service (PayPal)
If you are just selling a few items on your website then an
account with one of the online payment companies like PayPal or 2CO may work for
you. However, If you are planning on selling many different types of items then it may be better to
use a dedicated software shopping cart system.
If you are thinking about opening a Merchant Account...
The question you need to be asking yourself is:
At what point does it make sense to opt for a standard merchant account ?
Here is an example: 2CO vs. AuthorizeNet
150 transactions will costs you $67.50 (at a rate of .45 per transaction)
The typical per transaction rate is 5.5%. (not significant unless you are selling high priced items)
So, as you can see, you need to be doing over 150 transaction per month before if makes sense to get a Merchant Account with a Payment Gateway !
(A typical merchant account and payment gateway bill is $70. per month or more)
Below are several options that don't require you to get a merchant account or a gateway service.
2CO (2checkout.com)
2CO is not a provider of merchant accounts. Actually, 2CO acts as a reseller of your products/services. They allow your customers to make purchases via various payment methods such as by credit cards, debit cards, and electronic checks. 2CO acts much like a Department Store that sells products produced by thousands of manufacturers.
2CO applies a 5.5% commission on each transaction, plus a $0.45 charge per transaction. They do not enforce a minimum or maximum on sales volume or pricing.
The rates that 2CO charges are a bit high compared to a standard merchant account but you need to remember that they have no monthly fees which means that you actually will save a lot of money in monthly charges. On the other side of the coin, if your business has a high sales volume, then a standard merchant account might be better for you because their rates are lower.
Other than the $49 signup fee, all 2CO fees are applied on a per order, or per transaction, basis. Your account will stay open even if you do not have any activity on the account for extended periods of time and it will continue to remain open until you contact them and ask them to close it . They also do not penalize any account that experiences lower volumes of sales.
So, as you can see, it may make sense for you to get this low cost provider if you don't already have a merchant account or can't yet afford one.
2CO has a number of requirements that you need to meet before you can affiliate with their company.
Basically, you can use 2CO if:
You maintain a web site(s) that contains complete marketing, advertising, and product information including valid customer service information, a refund and return policy, their compliance disclaimer and a universally accepted privacy policy.
Your customers will place the orders themselves through your web site and 2CO.com. Suppliers of 2CO agree not to place orders on behalf of customers as part of normal business operations.
Your product or service must meet there product/service requirements.
Prohibited products list:
https://www2.2checkout.com/documentation/allowed.html
That's about it.
I highly recommend 2CO as a payment processor, especially if you are just starting out and/or if you want to save a lot of money in monthy charges!
Signing up with 2checkout.com will allow you to accept payments online without getting a merchant account. sign up for an account
PayPal
Paypal has been around for a long time is a well respected payment service. sign up for an account
Caribbean Merchant Account Solutions
A lot of businesses, especially in the Caribbean region have trouble opening merchant accounts because they discover that most of the main payment processing companies require a US bank account. One way you can accept payment online from a Caribbean island location is to open a merchant account with your local bank. Then it is a simple matter for your webmaster to create a secure mail form to send you the order information by email from your web site. You just have to process the orders manually. Some of my Caribbean clients find that this works well for them.
Merchant Accounts
Merchant accounts are perfect for people who want to accept payment from their websites in realtime. If you have a US bank acount then check out this merchant account company. They utilize AuthorizeNet as the payment processor.
