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.


Unknown said...

From the above comments, it seems like Google Checkout would be an excellent choice.

Michael said...

Actually, there's an issue with Google checkout. Anyone buying has to register their card with them. Working with one client, removing Google checkout and just accepting credit cards directly boosted his conversion rates.

Now, fees are based on "how processed" (i.e. face to face, online, etc.) and card type "qualified debit, rewards, corporate). For online accounts, it's usually 2-Tier.

You can get an authorize.net account by signing up with a number of vendors (including me). Many do not charge set up fees, etc.

My free report deals mainly with retail & face to face, but based on your searches and how folks have a hard time with it, maybe I should put together a report for online only.

If you have any other questions, you can post a comment on my site at www.ampyourcashflow.com

Michael said...

Hey John, sorry to be a pest. 2 Checkout technically is NOT a merchant account vendor. They are a 3rd party processor, meaning, they process payments for clients and act sort of like your sales agent.

If you read their disclaimer pages you'll find that they, in essence, become your authorized rep for online sales.

Not a good deal for business owners (in my opinion)...