If your company sells or want to sell online, you need to be able to accept credit card payments. The traditional way is to open a merchant account with a financial institution. However, traditional merchant accounts are expensive primarily because they charge fixed fees that your company will have to pay even if it you didn’t realize any sales.

A merchant account will typically charge:

• An application fee
• A set-up fee
• A discount rate : usually between 2% and 3% of every sale
• A per transaction fee
• A monthly minimum fee
• Statement, gateway and connexion fixed fees

Therefore it might be useful to think about third party credit card processing services (for example, Paypal), at least in the beginning.

It is an easy, safe and quick option to accept credit card payments for your sales online. Third party credit card services usually just charge a percentage of sales (which is higher than the discount rate charged by merchant account) and a per-transaction fee, so you only pay when you sell something .

If your sales volume is not very high, a third party service can save you money. However, the advantages of using a third party service will start to shrink as your sales start growing, the fixed fees of the merchant account being offset by its lower discount rate.

We recommend you to beforehand calculate your breakeven point; it means the number of monthly sales for which starting your own merchant account becomes more cost efficient than the third party solution.

Categories : Advices | Tags : Marketing, Sales | 0 commentaire associé