Before the Internet came into the business world, the only way to process credit card payments was to establish a merchant account at a commercial bank. Today the Internet provides a business owner with a multitude of options in order to accept credit card payments online over the internet. Depending upon your monthly volume of online credit card transactions, fees and rates will vary. Before you start a relationship with any institution, make sure you understand the charges and fee structures.
The quickest and easiest way to start accepting credit card payments (Visa, MasterCard, American Express and Discover cards), debit cards and bank transfers online is by setting up a standard PayPal1 account. It took me just a few minutes to complete the application and start taking credit card orders. In addition, your customers do not have to have a PayPal account to use their credit card. PayPal does not have any monthly, set-up, or cancellation fees. The bad news is that their transaction fees are high (up to 2.9% of the transaction amount).
Merchant Account Services
If you are looking at hundreds of transactions per month, a merchant account will be your best bet. The transaction fees may be lower but there will be other fees for you to consider. The following fees are common practice among merchant account vendors:
•AVS (Address Verification Service) verifies the billing address that the customer supplied.
•Batch fee is a daily fee to close out all the transactions for the day.
•Chargeback fee is incurred when a customer disputes a charge.
•Monthly Minimum fee is charged if you do not meet or exceed the monthly volume of transaction that you agreed to.
•Reporting fee is charged for you to download your credit card payment detail.