How to Accept Credit Cards from Your Website With a Merchant Account

Have you ever wondered why some small business owners don’t accept credit cards? Or why others have a $10.00 minimum? Well it’s not because it’s hard to get a merchant account. Banks and other 3rd party merchant gateway companies are knocking each other over to sign up new merchant accounts. It’s the fees.

The average merchant who accepts credit cards pay a monthly fee, a discount fee between 1% and as high as 8% per a trans action. I never understood why they call it a discount fee. They don’t give the merchant a discount for doing business with them; they charge them the fee on top of the total amount the customer spends.

For example if a customer spends $50.00 the merchant is charged 1 to 8 % based on the total sales price, plus I forgot to mention the per transaction fee, on top of the monthly gateway fee I mentioned before. Plus any yearly fees each credit card they accept may or may not charge. So a $50.00 purchase can cost the merchant around $3.75. Oh yes. I forgot the charge back fee for when a customer brings the item back and request a refund. You get the ideal.

For many years’ small webmasters and Internet based business owners were able to avoid all of these fees by setting up accounts through 3rd party billing agents such as Ccbill.com. These companies didn’t charge a setup fee, no monthly gateway fees. They took a small percentage of the total cost usually under 2%, plus a small per transaction fee around about .35Ã?¢. This made accepting credit cards affordable for anyone who wanted to sell over the Internet.

You would think it was a win-win situation. Well Visa discovered that they were loosing money. They could only charge companies like Ccbill.com one yearly fee. But they had thousands of websites accepting payment from their card holders. Now Visa still got the discount rate and the per transaction fee for each transaction that Ccbill.com and other companies like them charged. So what did Visa do?

A few years back Visa started charging every website that accept their card $1,500.00 a year, for the honor of accepting Visa. No one else charge that type of a fee to internet merchants. In fact you can still go to Ccbill.com and accept every other major credit card without any additional fee. So why did Visa do this?

Visa said it’s due to credit card fraud, associated with Internet sales. But if that were true why don’t American Express and MasterCard charge similar type of fees? The truth is, in my humble opinion, they got greedy. As result many small Internet merchants had to either fork over the money or find alternative methods of accepting credit cards at an affordable rate.

You may be asking yourself, and I hope you aren’t speaking out loud, why didn’t the merchants simply stop accepting Visa? Good question. Visa is the number one card that most people use. Also, if 30% of your customer base charged their purchases using Visa you risk loosing 30% of your business over night. It sounds like a shake down to me, but who am I to make that assumption?

Many merchants went to offshore 3rd party billing companies. This was risky, because the merchant had less protection, if the billing company didn’t pay the merchant and they paid slightly higher fees. Well Visa stopped that cold in its tracks, by simply imposing a higher fee for off shore accounts. So now small Internet merchants who want to continue to accept Visa as a form of payment from their customers had to pay up or risk having to shut down. Capone would be proud. Did I just say that out loud?

You never guess who teamed up and saved the day for the small Internet merchant? Give up? PayPal.com and ebay.com came to the rescue. PayPal.com and ebay.com teamed up to make buying and selling on ebay.com easier and more secure. So PayPal.com made their system totally automated users can add a PayPal.com “Buy Now” button to their ebay.com auction and accept payment online. The buyer could pay with any method they preferred from bank transfer to credit card, including Visa. And the seller doesn’t pay Visa a $1,500.00 yearly fee.

So now you’re asking how this applies to your Internet merchant website. Well PayPal.com isn’t a traditional 3rd party billing company. PayPal.com started out as a way for anyone with an email address to send money to anyone else in the world as long as they also had an email address. Sort of like the Western Union of the Internet.

So when you sign up with PayPal.com, at no charge, and your customer does the same, at no charge, you are simply two people transferring money between each other. You avoid the extra cost from Visa and you can still allow your customer to pay using their Visa card.

So why doesn’t Visa charge a $1,500.00 yearly fee to the millions of ebay.com sellers? Simple ebay.com is the Walmart of the Internet. Millions of dollars a day are transferred over ebay.com everyday. Simply it’s good business. A small Internet merchant is more likely to pay the fee. The average ebay.com seller is a stay at home soccer mom or dad type; they can just as easily have a yard sale or go to the local swap meet and sell their wares.

A few innovative Internet merchants discovered that they could use that same system to integrate PayPal.com into their site and accept credit cards. PayPal.com set out and perfected their system to be secure, easy to use and so simple that almost anyone can incorporate it into their site. PayPal.com will even give you a shopping cart feature that you can add to your site free of charge.

Here are the steps you need to start accepting payment through PayPal.com. First you need to go to PayPall.com and setup a merchant account for free. You must have a merchant account to accept payment. Next they need your banking information to verify your account and to have a place to deposit all of the money you make from sales. Now you can go to your merchant tools page and create a link based on the type products you sell. Then you simply cut and paste the link into your site. Very basic HTML skills are required. If you have a webmaster they can add it in a few simple steps. If they want to charge you some sky high fee to add this type of payment gateway, get a new webmaster. This is really nothing more then writing simple HTML code and it should not cost you no more then what the basic fees are. They shouldn’t charge you the same fee they do for incorporating a traditional shopping cart system into your site. PayPal.com has automated the process so much that it’s as simple as cut and paste.

The good thing is that once a customer signs up with PayPal.com they never have to sign up again. And their payment is completed on a secure server. Once you complete the verification process by PayPal.com you can place the Paypal.com Verified Merchant seal on your site.

If you want to accept international payments without the headache of currency conversion rates sign up for a Moneybookers.com account. It works just like a PayPal.com account and it’s free to sign up. You need to sign up as a merchant account to use the payment options on your website. Both sites allow you to keep track of all transactions online. Moneybookers.com does charge a one time setup fee and a small monthly fee. Moneybookers.com doesn’t charge a per transaction fee, but does charge a small discount rate, which was 1% the last time I checked their site (May 29, 2006).

If you need a more sophisticated payment system go to www.phpcoin.com and download their free software. This software will work with almost any billing system around, including PayPal.com and Moneybookers.com. Some websites have this program as an option in your control panel. If not, you may need to pay for a web designer or webmaster to integrate it into your site. They will charge you their normal fee for setting up a shopping cart system.

I have two sites setup that use the PayPal.com and Moneybookers.com systems. Take a look at them. I only use PayPal.com and Moneybookers.com, because I get to avoid the Visa fees and keep my customers. By the way Visa charges the fee for each site you accept their credit cards from.

http://www.abettermatch.com is the site I use the basic PayPal.com and Moneybooker.com payment systems.

http://www.anthonyjcoe.com/hosting/mod.php?mod=orders is the site which I use the phpcoin.com shopping cart software.

http://www.anthonyjcoe.com/hosting/mod.php is the control panel where your customers can login and manage their billing account with you. You can also login and manage your customer’s accounts. To use a demo version of this control panel go to http://www.phpcoin.com. Don’t do test orders from my sites unless you want to buy a web hosting plan.

Both have advantages and disadvantages. You have to decide which system fits your needs. Now go forth and start making money from your websites. Leave blogging to the teeny boppers. If you’re paying for web space you should be making money from it.

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