These Are 7 Things To Know About Online Merchant Accounts
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In this kind of economy, almost everyone is trying to find a way to make money online. Some people are fairly successful. For newcomers to the Internet, or for those who have never done much buying on the Internet, it’s important to understand what’s involved, especially as a new business owner. Here are 7 things to know about online merchant accounts.
1. A merchant account is a way for merchants (you!), to be able to collect the money someone owes you after he buys from you or hires you. It contains two separate entities: one that processes and clears the payment, and the second one that actually funds your account.
2. They can be very expensive. Read the fine print. Look at “discount points”. God knows why they call them discount points, because they have nothing to do with a discount. This is the percentage of the sale that you are charged for each transaction. These points average 2.5 to over 6.0 in some cases. They usually vary from bank to bank, but no matter what, American Express is always the most expensive – which is why many stores don’t take Amex cards.
3. Keeping reading those terms and conditions. Some of these online companies couldn’t care less about you and your company. They are in business solely to charge you every possible fee they can think of. Before committing, make certain you won’t be stuck with an early cancellation fee which can sometimes run as high as $500. Sales reps for these plans are notorious for lying through their teeth when asked about these fees. Read the agreement; it’s the only way to see what you’re getting.
4. As you continue reading the fine print, look for deposits, monthly charges, and automatic debits from your checking account. Again, many of these companies are in business to do nothing more than charge you fees in exchange for providing little service. Some charge you hefty monthly fees no matter what. (As if your “discount points” weren’t enough, right?)
5. Let’s say you didn’t sell a minimum of $500 last month. You might see some odd and very high charges on your monthly statement! The less you make, the more they charge!
6. It takes times to get paid! Let’s say you sell a downloadable eBook for $12.95. It clears through your merchant account. When do you get paid? Depending on the bank you signed up with, it can be anywhere from 3 to 10 days! And don’t forget – you don’t get your $12.95. Remember those discount points? You could end up with less than ten bucks!
7. And here’s one you learn the hard way. If a customer believes he’s been overcharged, or decides he wants his money back – even if your site explicitly says no refunds, no guarantees, and all that – you will log on to check your bank account one morning to find that you are either over drawn, or there is money missing. Why? Because your Merchant Account provider automatically sides with the customer. He doesn’t ask you questions first; he simply takes the money away to give to the customer! YOU then need to spend sometimes months sending in paperwork, and going through mediation services (usually at your expense). In the meantime, your money is gone and the customer has the product or you have fulfilled your contractual obligations in some other way. Your chances of getting your money back are very slim!
If you really believe you need a merchant account, stick with large well known processors with good reputations and reliable merchant support.
If you’re seriously considering getting into the Internet marketplace to make your money, we have got the inside scoop on internet marketing and credit card processing accounts .
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