There was a time not so long ago when getting an online merchant account was difficult to do, expensive and complicated to set up and often times small businesses and entrepreneurs would find it nigh on impossible to secure one.
Fortunately, the world of online payments is moving fast and getting more competitive too, which means that if you have a small business selling products or services online, you can almost certainly get set up in no time at all.
Here’s how to tackle that critical first step:
Security Issues
Obviously, taking payment details online is fraught with security risks and understanding what they are is important. Generally as a merchant if you accept a fraudulent payment you will be liable for at least part of that cost, so make sure you read the terms and conditions and find out what your responsibilities are.
Some merchant account providers will provide security checks and fraud protection which obviously limit your risk. You should also look for 3D secure, as accepting this often limits your liability further – in fact on payments where this is used you are generally relieved of the responsibility.
Fees And Charges
The first fee you will come across is probably going to be a set up fee, this fee is generally non-negotiable for small businesses and can be pretty expensive. Make sure you shop around and weight up set up fees against lower transaction fees.
For start up businesses I would suggest favouring a lower set up fee even if that means higher transaction fees. Also make sure you find out what the cancellation fee will be in case things don’t work out.
Transaction Fees
The bulk of your on-going charges will be for transactions, you will generally pay a fee for debit cards and a different fee for credit cards. Also remember to take into account payment gateway fees – this is the cost you pay to get those secure card details to your merchant account for processing.
Side Note:
A payment gateway is basically a secure web page where your customer enters their card details and submits them to your merchant account. You might get a payment gateway included, but you might find you have to apply for a payment gateway separately.
If you are only accepting payments in one currency then that should be everything you need to pay, but if you plan to accept 2 or more currencies you should also check how this process works, how your exchange rate is worked out and whether there is an additional currency conversion fee to pay.
If your customer has to pay in a different currency than their own they will generally have to pay a fee to their own bank, so accepting more than one currency might help your sales, but it is an extra cost and complication.
Look For Some Flexibility
A few years back you would have to be tied into a long contract and pay a charge to get out of it, but merchant accounts are much more competitive now and you should be able to find a provider that gives you some flexibility to either grow or downsize.
If you are being tied into a contract you should be getting lower fees as a result, so make sure you are getting the best deal and a contract length that fits with your business.
For more information about business, currencies and finance, please check out my website here.
Featured image on home page slider courtesy of 401(K) 2012.
