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Old 7th April 2014, 03:36 PM   #41
JasonRubs
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Originally Posted by Victor196 View Post
Kathy, unfortunately I don’t know much about PayPal or internet based business, but there is some info you might find useful.

First of all you should never sign contract with early termination fees or some will call it “reasonable amount of liquidated damages compensation”.
In most contracts it will be pre-printed in the back, so you have to ask for signed Addendum from processor before signing contract. Do not accept verbal promise. Just tell them that there are many processors who believe in keeping business the old fashion way – by earning it. If they refuse, say good bye. Not having early termination fees will give you an ultimate negotiating power in the future. You will need it later. Do not be afraid to be firm. It’s very reasonable request.

In application put twice higher amount than anticipated for monthly volume, average ticket and highest ticket. As soon as merchant account open call processor and find out what exact limits you have been approved for. (It may be different from what you applied) You have to know and stay under your limits. If you need to process higher volume than approved, call processor to get permission. If you don't, bank or processor may hold your funds for a long time. It’s called “Reserve Account”. By signing contract you giving permission to processor to hold any funds at their own discretion, every contract has it and many business owners suffer because they were unaware of this rule. Consult with processor.

In internet business all your transactions will fall under category e-Commerce Basic. For example: if customer buys $100 product using Regular Visa it will cost interchange fee of 1.80% + 10 cents plus assessments of 0.0925% or 9.25 cents plus processor's mark up of ….could be 40 – 50 cents. All together it might cost $2.5 – $4.
Somebody please correct me if I’m wrong.

Another thing to pay attention is Chargeback.

I would go with midsize processor like Payment Logistics or Netcom Pay System.

Hope this helps and good luck.
I have been helping business owners set up merchant processing account for almost ten years now. I will share some of the most common pitfalls experienced by small business owners.

1) Don't wait until the night before the grand opening!

- This always boggles me, the business owner that thought they could set up a merchant account in 24 hours. You should take care of this at least 30 days in advance to account for the learning curve, shipping and making sure this system is a good fit for you and your operation.

2) Get Real!

- Expect to pay in the range of 2.5 - 3.5% per transaction. If after adding up your bill at the end of the month and with all fees included you fall in this range you have no reason to search for new deal. You have already got one!

3) Don't get caught up in the hype!

- Due to the advertised simplicity of the new "SQUARE" everyone thought it would work for them! Although, to many times business owners get "caught up in the hype" and don't read the contract and the part about how the business they operate is prohibited by that processor.

4) Do your research and find a trusted advisor.

- Work with a business consultant or consulting firm that deals with many processors and has knowledge and experience specifically in this field. Business owners usually try and take the initiative and contact processors directly. Sadly, this usually leads to higher costs and even rejection in most cases. A third party consulting firm can also contact the processor on your behalf if you feel something is wrong, like a misc. fee you needs to be explained. Your consultant has a back line to the processor and can usually get answers much quicker than you can on your own.

Bottom line is don't try and do it all yourself. Ask for help, analyze the options before you, don't sign up for anything online before you are absolutely sure (digital signatures are just as good as ink these days)

BTW - Don't lie about your average ticket and highest ticket size as posted by the user above. This is another sure way to get your funds tied up in risk reserve. Your bank statements (that will be requested) don't lie.

Good luck!

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