|
How To Find the Best Merchant Account For Your Business
Copyright 2004 Diane
Hughes
What a great idea! Start accepting credit cards and watch your
profits soar. Nothing could be simpler. Or so you thought until you began
researching merchant accounts. It can all get extremely confusing. There is
an easy way to find the best deal that suits your business. You'll be
able to compare apples to apples and have a clear picture of what the
merchant account will cost you.
Let's take a look at some of the phrases
you'll encounter
(in layman's terms) when you begin to search for a
merchant
account.
--- Merchant Account Provider - The company who
arranges
for your payment hardware or software and your ability to
accept
credit cards.
--- Nova - The company who processes the credit
card
transactions and forwards them to the appropriate credit
card company
for payment (Visa, MasterCard, American
Express, etc.)
--- Set Up Fee
- The one-time amount the merchant account
provider charges to set up your
company in their system.
For this example, we'll use a set up fee of
$65.00.
--- Discount Fee -One amount (there are others) that Nova
and
the merchant account provider deduct from each sale as
a portion of their
payment for your merchant account. We'll
use a discount fee of
2.25%.
--- Per Transaction Fee - This is a second amount that the
two
companies subtract from each transaction as a portion
of their payment. For
our example, we'll pick a per
transaction fee of $.35.
--- Terminal or
Gateway Fee - Whether you have a real
terminal or a virtual gateway via the
Internet, you will be
assessed monthly charges to cover the use of that
service.
Let's say $10.00 for our example.
--- Statement Fee - The fee
for your merchant account
provider to send an itemized statement each month.
An
average amount we can use is $15.00.
--- Annual Fee - An annual fee
just for having your
merchant account. For the annual fee example, we'll
choose
$35.00.
I know what you're thinking! But don't give up before
you
start. Remember, I'm going to show you a way to decipher
all this
information.
Choose a number -- any number. This will be the
total
number of transactions you think you might conduct during
the course
of a year. For our example, we'll use 100. Next,
choose an average
transaction amount for your product or
services. We'll say $175.00 for now.
Finally, we'll
calculate a year's worth of charges by using the
amounts
above and within the definitions.
Set Rate Charges:
Set up
Fee = $65.00 (one time only)
Gateway Fee = $10.00/mth
Statement Fee =
$15.00/mth
Annual Fee = $25.00/yr
Then multiply your estimated number
of transactions by the
$ .35 per transaction fee. That equals $35.00.
Next,
multiply the average transaction amount ($175) by the
discount rate
of 2.25%. That equals $3.94. You've estimated
that you'll have 100
transactions per year, so again,
multiply the $3.94 by the 100 transactions.
The total
equals $394.00. All that is left is to add them all up.
Set
up Fee = $65.00 (one time only)
Gateway Fee = $10.00 x 12 months =
$120.00/yr
Statement Fee = $15.00 x 12 months = $180.00/yr
Annual Fee =
$25.00/yr
Per Transaction Fees = $35.00/yr
Discount Rate Fees =
$394.00/yr
Total Fees & Charges For One Year = $819.00
Let's
look at one other quick example just to show you that
looks can be
deceiving.
This company offers the following rates:
Set up Fee =
FREE
Gateway Fee = $15.00/mth
Statement Fee = $10.00/mth
Annual Fee =
FREE
Per Transaction Fees $ .30
Discount Rate Fees = 2.35%
Software
Lease = $24.95/mth
Based on our same $175 average transaction and
100
transactions per year, we come out with the
following
figures:
Set up Fee = FREE
Gateway Fee = $15.00 x 12 =
$180.00
Statement Fee = $10.00 x 12 = $120.00
Annual Fee = FREE
Per
Transaction Fees (100 transactions x $ .30 = $30.00)
Discount Rate Fees =
$175 avg. transaction x 2.35% = $4.11
x 100 transactions =
$411.00)
Software Lease = $24.95 x 12 = $299.40
(an additional fee our
first provider didn't charge)
Total Fees & Charges For One Year =
$1040.40.
Even with free set up and no annual fee, this company
still
charges over $200 per year more than the first merchant
account
provider we previewed. Be very careful - the word
"free" can often times be
deceiving.
Merchant accounts can open a world of new business for
your
company. They can provide a very convenient way for your
clients to
pay - and for YOU to get your money. However,
when you shop for a merchant
account, be sure to use a
standard unit of measure like we've outlined above
to be
very sure that you are getting the deal best suited for
your
company.
About the Author:
Diane C. Hughes *
ProBizTips.com
FREE Report: Amazingly Simple (Yet Super Powerful)
Ways
To Skyrocket Your Sales And Build Your Business
Into A Tower of Profits!
==>> http://madmarketer.com/diane
|
