You have a passion, and you’re sure you can make money on it. Maybe you make macramé potholders. Maybe you perform custom guitar repair, or build ukuleles painted with the patterns of sunsets. Whatever it is, you’re sure that you can move product if you can connect with customers who might value your product. In your long search for ways to connect with collectors of Beanie Babies, you realize you’d be crazy not to take your business online.
You develop a product line, buy a camera to take pro photos of your products and research the industry to ensure competitive pricing. You hire a local web designer to develop a site, and it far surpasses your expectations. She builds you a sleek, easily navigable site you can easily update yourself, expanding content naturally as you develop new product. Your stock is filling your basement, and you are ready to spread your wares all the world over. Then you realize there’s just one small problem. How are you going to get paid?
The good news, is there exists a plethora of online services that will handle this for you. A payment service will handle the transaction, accept your clients’ credit card information and forward you the cash. Of course, these services won’t do this for free because everyone has to make money somehow and you will give up a sliver of the transaction as a fee. For that fee, you receive an easy, efficient way to market your products to a wide audience.
Of course, like any business decision, choosing the right payment processor is best served by researching different services and choosing the pricing scheme most effective to your business model. Here are nine places to start.
PayPal – Is perhaps the best known among payment processors. PayPal offers several business options, including a discount for registered non-profit organizations. Their fees are the same across all sorts of accounts. Every transaction carries a flat fee of $0.30. Purchases up to $3000 are charged 2.9% of the transaction amount. Transactions from $3001 to $10000 are charged 2.5%. Those from $10001 to $100000 are charged 2.2% and transactions above $100000 carry a charge of 1.9%. PayPal does offer premium services that carry a fee but their basic service carries no monthly charge. PayPal accepts Visa, MasterCard, American Express and Discover.
Moneybookers – Engages in a highly competitive fee structure. Their flat fee edges out PayPal by a penny and their commission scheme is identical, with two exceptions: Moneybookers charges only 2.4% for transactions between $3000 and $10000, and only 2.1% for transactions between $10001 and $100000. For many vendors this will make little difference. But, if you plan on routinely processing transactions of over $3000, it could very well edge up your profits.
ProPay – Offers a variety of services with a variety of charges. Each account carries an annual fee ranging from $34.95 to $299.95. Charges for accepting Visa and MasterCard range from 2.69% and $0.25 per transaction to 3.5% and $0.35 per transaction. The more you pay in annual fee, the less you’ll pay per transaction. Accepting Discover and American Express will require an account costing $59.95 or above and the rates are a little higher than those of Visa and MasterCard.
NetBilling – Is a ten-year veteran of the online transaction acceptance game. Their rates start at $0.25 and 2.25% per transaction, and go as low as 1.5% and $0.15 per transaction. NetBilling services include processing credit cards and checks so make sure these guys are one of the first payment processors you inquire about.
GoEmerchant – Doesn’t advertise percentage-based fees. Instead, you’ll pay a monthly $59.95 ($19.95 if you use your own shopping cart), an annual $29.95, and a setup fee of $99. An account at GoEmerchant comes with secure credit card processing, fraud protection, marketing tools, and toll-free customer support. For those that make a lot of transactions, this is the processor for you.
2Checkout – Allows you to accept credit cards and PayPal, but that will cost you a one-time setup fee of $49, a flat $0.45 per transaction, and 5.5% of each transaction. Again, a little much compared to others on this list.
CCNow – Will charge a $9.95 sign-up fee, $0.50 per transaction, 4.99% of gross sales, and a monthly fee of $9.95 if your transactions are less than $100 monthly. Nothing special about these guys but their sign-up and monthly fees are low compared to others.
RBS WorldPay – If you don’t mind the added step of converting your dollars into pounds, you might consider RBSWorldPay. Their business gateway service comes with a monthly fee of 19.95 pounds each month. (That works out to about $30, but check current exchange rates to be sure.) But, that $30 monthly fee buys you 300 included transactions monthly, and an easy way to accept a host of payment options. $0.30 per transaction isn’t bad, especially when it doesn’t come with extra commission charges. Of course, if you’re only processing 5 transactions monthly, those will each cost $6, so put some thought into how many transactions you can expect, and how much each will be. If you expect hundreds of transaction, and your purchase amounts are high enough to make the charge cheaper than percentage based fees, WorldPay might be for you. Extra transactions will cost 28 pence per, which currently exchanges to about $0.50. With the Royal Bank of Scotland behind them, you know this is a quality service.
ClickBank – Provides timely payments and boasts that they haven’t been late on only one in over 10 years. The problem is that their fees are far from competitive. ClickBank keeps 7.5% and $1 on every transaction. (You can also set up referral fees to be paid to an affiliate out of your share.) This is on top of an initial fee of $49.95 when your first product is approved. Also, every payment will cost you a $2.50 processing fee.
There are many variables beyond pricing to consider when it comes to selecting a processor. When it comes time to select a vendor, make sure you understand all terms of the vendor agreement. Understand whether or not the processor will carry a security deposit. For example, processor CCBill withholds a 5% rolling 26-week security deposit on all transactions, as security against returns, fraudulent transactions, and charge-backs. Also make sure you know the payment schedule, how often are payments issued and how long after transactions can you withdraw the transaction amount. Finally, take a look into how secure the processor’s transactions are and find out whether or not they offer fraud protection. You can never bee too careful these days.
Published or updated July 26, 2010.
