Tuesday, November 18, 2008

Merchant Account Sales People

I am setting up a new website and as part of this, I'm trying to setup a way to take credit cards. The sales people in this industry and I just don't get along. Am I wrong to resent this sort of response to one of my inquiries?

Thanks for inquiring on our services.
Here is a break down of our processing. When you take a Visa/MasterCard/Discover you only pay 2.25 % + .25 per transaction. Our merchant accounts include a 6 dollar statement fee, a 10 dollar gateway fee, and I will not charge you any setup fees, application fees or programming fees. Automatically we setup Visa/MasterCard and Discover, if you are interested in Amex let me know, but they charge about 3% and 5.95 a month.
If you have any questions give me a call. Please print out the attached application. Just fill out and sign the areas I have marked and send it back to me with a voided check of the account that you want your funds deposited.
You name left off....Account Manager

Here's what bugs me. I think the choice of a merchant account vendor, a credit card processing company is a big deal. Once selected, I'm pretty well locked into their technology and system not so much by contract as by momentum.

I'll train my people on their software, I'll store my customers credit cards on their system, and I'll interface with their technology. But, he seems to assume that there is nothing to discuss. He assumes that I think the pricing is a simple as that.

Am I the only one who gets PO'd at this?

Attached to his email there is the:
- the 36 page First Data Merchant Services Program Guide. A dense thorough document.
- the 3 page FDR agreement
and a few other docs.

I will say that one of the other people that I've made inquiries to called me today with a lets-get-this-thing-signed attitude. I asked a few questions about how the technology interfaces and was told that I could speak to technical support after I signed the contract. I asked how their pricing compared to Google Checkout and was told that I'm very confused, that Google was a search engine and was not in the credit card business. I told her that if she didn't have information about her industry and what was going on in it, she shouldn't call me again.

Monday, November 17, 2008

Merchant Account Services Search Engine

This is cool. I just saw a nifty search function on a blog about merchant account services (They're promoting their own).

It is a great informative blog.

I haven't had a chance to test out this search engine but I'm going to.

Oops, I just tried using it like a search engine putting in words like "security", "recurring billing", and "vendors" and either I'm not using it right or it's not working this morning.

What a shame, it looks cool.

Tuesday, November 11, 2008

Need a credit card vendor

I just rewrote this to put it on a forum.

It looks like our business model for use of the site will be $39.95 by purchase order of check. We will discount it for to $24.95 if you pay online with a credit card or by paypal.

We have grown from zero to 1.5M visits per month this year. We get around 4K weekly registrations. Once we start charging, we are guessing that the number of registrations will drop to 400/week.

At 400/week, $25 each, figure $10K/week. So ~$50K per year. We could be way way off.
This would make it my second largest business. I want to use a different credit card vendor this time.

Email to creditcardsonline101 at gmail dot com, if you are interested.
Here's my initial research.

Authorize.net - No free schedule online . You need to request a quote. 866-437-0476. When you get them on the phone, they quote:
$99 setup and $20/month for authorize.net
$10/month and $.25/transaction for the merchant account services provided by Cybersource.
Visa/Mastercard rates of 2.19% per transaction for qualified cards, 3.39% for nonqual.
Total: assume average rate of 3% plus $.25: $.99 total. BUT, the assumption of an average of 3% is a huge assumption.

Sage Payment Systems: No fee schedule on their site. You have to request a quote. (800) 261-0240.

2 Checkout: 5.5% of the transaction total, plus $0.45. For a $24.95 transaction, this would be: $1.82 or 7.2% of my transaction.

Paypal: 1.9% to 2.9% + $0.30 per transaction for domestic transactions. This is true for all credit card types. True for debit cards. One operator told me that the rate these days is 2.9%. The next one said that it was tiered. At volumes above $3K/month, I could get 2.7%. 1.9%. It does not depend on volume. Its $1.02. This is around 4%. 866 775-8151. Their service starts with a voice processing system which I found very annoying. I'm now 7 minutes into trying to get them on the phone. And unlike being on hold, it's constant work trying to respond to their voice response system to identify myself. Weird that people still think these systems are useful for customer service. When you create a business account, it can have multiple users. I asked why there is so much on the net about Paypal locking accounts. The answer was a long talk in which Paypal explained that they need to be secure. They could not provide any details on what number of percent of customer complains would trigger "locking" the account but said that I could get that from merchant solutions. Merchant solutions: 888 215 5506. Excessive rate of charge backs is 40%. At above $100K/month, you get an account manager. It's the same for all visa, mastercard, amex, 1% extra on international transactions including Canada:
  • $0.00 USD - $3,000.00 USD - 2.9% + $0.30 USD
  • $3,000.01 USD - $10,000.00 USD - 2.5% + $0.30 USD
  • $10,000.01 USD - $100,000.00 USD - 2.2% + $0.30 USD
  • $100,000.00 USD - 1.9% + $0.30 USD
Google Checkout: 2% + $0.20 per transaction (plus the expenses up to 10x of my Adwords fees are deducted from my expenses. Since I spend $4K/month on Adwords, this means that the first $40K of revenue is handled without costs. Since my fee with Google Checkout is 2.8%. This could potentially be absolutely free.

Decision Time on a new credit card vendor

It looks like our business model for membership on the site will be: annual recurring billing.

Question 1 - Is there any reason not to just go with paypal. It looks easy to setup. They have a clean API, plenty of support, and their costs seem reasonable?

Question 2 - I don't think an "annual recurring" makes any sense. I think we'll get a lot of chargebacks if we just do a recurring billing after 12 months. And a lot of credit cards will have gone bad.

If you have advice or proposals, you can comment here or email to creditcardsonline101 at gmail.com for more info.

The site that we are looking at putting htis on had 1.4 million visits last month. We're expecting to charge $25/year and have 400 payments per month. Figure a $500K revenue stream the first year. Then it'll grow...

Friday, November 7, 2008

Recurring Revenue & Voice Authorization Required

We have far too many members whose credit card suddenly gets declined. It just kills our business. One of the messages that we get is: "Voice Authorization Required."

We are now trying to get these cases authorized. So we dig out the credit card number and call in for an authorization number. They seem to just want the credit card number, expiration date, and merchant account number.

Anybody have any experience with this ?

Thursday, November 6, 2008

PCI Compliance Webinar

We got this email in the mail inviting us to free online webinar. We've accepted. I'll share what I learn....

The Payment Card Industry Data Security Standard (PCI-DSS) states that
companies which process, store or transmit payment card data must:

* Build and Maintain a Secure Network
* Protect Cardholder Data
* Maintain a Vulnerability Management Program
* Implement Strong Access Control Measures
* Regularly Monitor and Test Networks
* Maintain an Information Security Policy

Non-compliance can result in hefty fines, loss of ability to accept credit
card payment, and liability for fraudulent charges.

Concerned? We can help.

Our PCI experts will review key points of the standard, which companies need
to comply, common misconceptions about covered computing systems, as well as
other information important surrounding the standard. Additionally, we will
also be reviewing the most recent update to the standard, PCI-DSS 1.2, and
how it affects organizations as they move towards, or continue to maintain,
PCI compliance.