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| Determine
which merchant account is best for your business |
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| Getting
started |
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Sample
data is needed before a successful comparison can be made. The
fees to be used in the comparisons associated with having a true
merchant account and gateway are: |
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Setup Fee
- How much do you have to pay to have your account established?
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Discount Rate
– What percentage of the sale will the processor take?
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Transaction Fee
– What flat fee will they charge us for each transaction?
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Monthly Fee
– How much will it cost per month to have the merchant
account open and ready to process transactions?
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Gateway Setup Fee
– How much does it cost to have a gateway set up for
you?
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Gateway Monthly
Fee – How much will your gateway provider charge
you each month to use their payment gateway services?
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Now
we know what to get in our quote from a true merchant provider.
To do a proper comparison, only two more pieces of information
are needed: |
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Average Transactions
per Month – How many transactions will you
process each month?
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Average Ticket Size
– Some sales may be large. Some sales may be small.
But how much will the average customer spend on your website?
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There
are plenty of third party processors out there to choose from.
The third party processors to be compared against a true merchant
account in this article are: Paypal
Basic, 2CheckOut,
and WorldPay.
The fees for the third party processors
are fixed and thus no quote is necessary. As a result their fees
are hard-coded into our calculator. They are listed here for your
reference: |
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- If your business' monthly volume is
less then $3,000:
Setup Fee: $0.00
Discount Rate: 2.90%
Transaction Fee: 30¢
Monthly Fee: $0.00
- If your business' monthly volume is
greater then $3,000 but less then $10,000:
Setup Fee: $0.00
Discount Rate: 2.50%
Transaction Fee: 30¢
Monthly Fee: $0.00
- If your business' monthly volume is
greater then $10,000 but less then $100,000:
Setup Fee: $0.00
Discount Rate: 2.20%
Transaction Fee: 30¢
Monthly Fee: $0.00
- If your business' monthly volume is
greater then $100,000:
Setup Fee: $0.00
Discount Rate: 1.90%
Transaction Fee: 30¢
Monthly Fee: $0.00
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| True
merchant account rates will vary by provider. Our fictitious company
received a quote for a merchant account and gateway from Ficticious
Merchant Services (a fictitious merchant services provider). The
quote they each received is:
Setup Fee: $0.00
Discount Rate: 2.20%
Transaction Fee: 30¢
Monthly Fee: $10.00
Gateway Setup Fee: $99.00
Gateway Monthly Fee: $15.00
These rates are average and should
represent the true merchant account industry well for our purposes.
To get an accurate comparison
a representation of different kinds of merchants will be needed
as not all merchants have the same needs. For our comparison five
different merchants with various size average tickets and monthly
volumes will be used. They will represent all size businesses
from small ticket and low volume to high ticket and high volume.
Here they are: |
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- Company 1
(High average ticket and high monthly volume)
Average Ticket: $200
Average Number of Transactions: 500
- Company 2
(High average ticket and low monthly volume)
Average Ticket: $200
Average Number of Transactions: 5
- Company 3 (Low average ticket
and high monthly volume)
Average Ticket: $15
Average Number of Transactions: 600
- Company 4 (Low average ticket
and low monthly volume)
Average Ticket: $15
Average Number of Transactions: 20
- Company 5 (Medium average
ticket and medium monthly volume)
Average Ticket: $45
Average Number of Transactions: 220
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These
five companies represent five very different businesses in terms
of process needs. Represented are a business that process large
transactions and lots of them; a business that also has large
transactions but sees far fewer of them; a company that has small
transactions but processes many of them; a company that has small
transactions and processes very few of them; and a company that
has a medium size average ticket and a modest amount of sales.
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Information
used with permission and provide by John
Conde |
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