Can anyone recommend a good marchant account provider?

[deniseoberry]

Carlos --

I'm sorry to hear about your experience with PayPal. I love them as a payment processor. They have been easy to deal with and responsive. As a service provider, I dropped my merchant account to go solely with PayPal. The merchant account fees are so ridiculous because of all the points where some other company in the chain has to get thier piece of the pie.

I've been using PayPal for business since early 2000 and it's worked great for me.

Denise

[carlos123]

Hi Trish,

Thanks for clarifying the nature of the charges Trish. I understand what you are saying.

What I still don't understand, and which you really did not address, is how PayPal can offer no up front fees (despite their fixed costs too) while virtually all true merchant account companies charge up front before you can even establish an account with them.

That is what I don't understand Trish and which I would appreciate clarification on if you have any to give me on that.

But even more fundamentally...why do the payment gateways not go the PayPal way also. I mean would it not be possible for them to charge a higher percentage for each transaction (with the option to pay a fee to then be charged a small transaction percentage later) than the way they do things now?

Why is that all the merchant account companies and the payment gateways behind them all have to charge up front which to them is a very small fee to begin with?

Does it not make more business sense to entirely forgoe the up front costs associated with a merchant account (costs which probably have to do with commissions to merchant account salespeople than to covering actual costs involved in offering the merchant account), offer them freely and make up the costs on the back end through higher transaction percentages? With the option to have customers pay a fee at their convenience to lock in the lower transaction percentages when they get big enough?

That makes more sense to me unless there is some logic to the way merchant account companies are doing things now that escapes me.

Carlos

[carlos123]

I'm sorry to hear about your experience with PayPal. I love them as a payment processor. They have been easy to deal with and responsive.

Glad to hear that you have never had a problem with PayPal Denise. It is a truth of dealing with them that the majority have no problem until...well...their is a problem for whatever reason. Then it becomes a real problem!

All the people that are adamently against PayPal point to the truth of what I am saying. That when something becomes a problem it becomes a REAL BIG problem given their non-existant or slow as molasses response rate to customer inquiries and the beareucratic nature of dealing with them as a virtually unregulated company (compared to banks).

I do hope that your lack of problems will continue with them Denise. To be on the safe side though I would recommend that you regularly withdraw all your money from your PayPal account as quickly and as often as you can do so .

I will probably go back to using them for a while until I make enough to pay for a real merchant account or go with 2checkout. I am also looking at Amazon Payment Systems and Google Checkout.

Carlos

[carlos123]

Here's a real good site about the problems with PayPal by the way. What the author says is right on in my opinion. At least with respect to PayPal. Not sure about anything else he may say about other issues on his site but the things he writes about PayPal are well worth reading!

It is however unfortunate that Dan has now gone over to the darkside and is once again using PayPal (see his explanatory note at the top of the article) LOL. The link references at the bottom are also worth reading through too.

http://dan.tobias.name/thenet/paypal/

[deniseoberry]

Sure Carlos. Everyone's mileage varies on a company as big as Paypal. Being with them since the early 2000's and even dealing with customer service issues for me has been nothing but a good experience. I hope you can find a good alternative.

[carlos123]

I have a related question for those of you following this thread.

With PayPal if I withdraw money from them to go into my bank account and for whatever reason they decide to take that money back out and freeze my account...they can (see http://www.kudzuworld.com/blogs/tech/paypal.en.aspx for an example of how PayPal can reverse legitimate deposits into one's account).

Can a merchant account provider do the same?

That is...can a merchant account provider take money back out of my bank account after it has been deposited into my account?

Is there a way to have absolute control over who can go in and take money out of my bank account (once deposited) other than setting up a seperate bank account at a different bank and transfering all deposits immediately into it?

Any further input would be appreciated.

Carlos

[carlos123]

I may have found a merchant account provider that does not charge any up front fees while having reasonable transfaction fee rates.

Not sure yet as their offices are closed for the weekend but it comes highly recommended from a site that is talking about the pitfalls of using PayPal.

Again I am not sure if this merchant account provider really is a no cost up front provider but it looks like it's worth checking out. I've applied.

Here is a link to it in case anyone knows anything about it -> http://www.free-merchant.com/

I am not in any way affiliated with this provider.

Carlos

[deniseoberry]

Yes, they will reverse that money out of your account AND charge you a fee for the chargeback. It's all about fees, fees, fees with a merchant account. Out of control in my opinion.

[carlos123]

So I take it then that it pays to keep a percentage of one's money in the bank account connected with the payment processor at all times to account for chargebacks. Interesting. I had not thought about that. Good to know.

I don't imagine I will have much of any chargebacks given that I am offering web development services which are paid for when the work is done and delivered by me over the Internet to the satisfaction of the customer but you never know. I guess it's possible though not very likely.

Carlos

[TrishL]

I am 'guessing' that PayPal can adopt this model because they have the volume to make it work. Remember there are literally tens of thousands of merchant account providers out there - but one big old' PayPal.

Also, remember, you've got two companies (at least) involved when a virtual terminal is involved - the acquirer and the internet gateway provider. The acquirer makes their income on each transaction (see the article I referred to re: Merchants Accounts: What Should they Cost?) - the internet gateway provider does not (other than a small per transaction fee - they don't charge a discount rate) - the way they make money is on the set up cost and the monthly gateway fee. There is HUGE cost involved in maintaining those businesses given the security risks they assume (a big benefit to the merchant) - if there is a data breech, the responsibility is theirs).

Another point to consider (and let me stress - I am NOT trying to sell you anything, in fact, I pretty much only set up accounts these days for "friends and family" - I just happen to write a bit on the topic) - in terms of upfront fees vs. increased back end fees: Would you rather pay $50 to set up an account w/ a $20/month virtual terminal fee... or pay an additional 1% (or more) on processing volume?

In year one - under the first scenario - you would be paying less than $300 for the internet gateway. Under the second scenario - lets say you process $100,000 for the year - an additional 1% would cost you an additional $1,000 to avoid the upfront fee.

Again - there are many, many factors to consider - another article I wrote is about getting an "Apples-to-Apples Comparison" - maybe that will help.

Sorry to all - I am not here to sell credit card processing AT ALL. I hope these insights have been helpful.

For what its worth - for my OWN service business - I use PayPal because I have a relatively small (for now!) number of transactions and the average ticket is pretty decent - so the size of the transaction fee doesn't impact me that much.

However, as my business grows and I add lower-price point options - I will carefully evaluate all variables and will at some point switch to a true merchant account when I reach the break-even threshold.

Just my 0.02. I will sign off this topic now!