A Quick Guide to Third-Party Credit Card
If you've ever looked into getting your own merchant
account, you already know how expensive it can be.
Application fees, setup fees, standard monthly fees,
transaction fees... they all add up fast! It can be
too much for a business that's just getting started.
There is an alternative. Third-party credit card processing
companies handle your credit card transactions for you in
return for a cut of your profits. Setup is typically
either free, or there's a small, one-time fee.
Here's here it works: once you've applied and/or
been approved and paid any applicable setup fees, you create
ordering links for your products. These ordering links
lead to the third-party processor's server, where they
handle orders on your behalf. Credit cards and online
checks are common ordering options provided by third-party
processors. Some also offer a telephone ordering
After your customer places an order, that sale is
automatically credited to you, minus the company's
commission. You are paid by the third-party processor at
regular intervals, according to their pay schedule.
So what's the big deal? Why would third-party
processors appeal to startup businesses? Aside from
the setup fee, you are only ever charged IF and WHEN you
make a sale.
If you don't sell anything, you're not charged anything.
Here are a few things to consider when researching
much is the setup fee? Don't be put off if there
is one; three of the four processors I use charge a
setup fee, and they've been well worth the small cost.
fees. After paying these fees, do you still make a
reasonable profit? I've seen fees ranging from
around 5% to about 30%, with the average somewhere in
there additional fees for accepting online checks or
telephone orders? Does the processor even offer
these as options?
fees. Does the company charge to cut you a check
each pay period, or to wire transfer your funds to you?
much is the reserve? A 'reserve' is the amount
held back from each pay check as a "slush
fund" against future refunds, returns, or
chargebacks. What percentage do they hold as a reserve,
and for how long? It's commonly 10%, 10%, held for 6
months before being released back to you.
frequency. Most pay either every two weeks, or
once a month.
Talk to others who have used the service to see if
they've had any problems. If your order processor
is 'down', your customers can't buy!
and limitations. For example, is there a minimum
monthly sales quota you must reach? Is there a maximum
product price you can set? Does the company restrict
what the type of content you can sell? Do they
handle only tangible or intangible products?
service. Does the company respond promptly and
helpfully when you contact them?
For example, are there reporting or tracking
capabilities? Free use of a shopping cart?
Finally, here's a short reference list of several third-
party processing companies:
* Clickbank, http://clickbank.com/
* GloBill, http://globill.com/
* Digibuy, http://digibuy.com/
* Revecom, http://revecom.com/
* iBill, http://ibill.com/
* 2Checkout.com, http://2checkout.com/
* Verotel, http://verotel.com/
* CCNow, http://ccnow.com/
As you can see, there are many options, so don't let a
tight budget prevent you from taking orders online!
Third- party processors are both convenient and
affordable -- even for startup businesses.
Angela is the editor of Online Business Basics, a practical,
down-to-earth guide to building an Internet business on a
beginner's budget. If you enjoyed this article, you'll
love the book! Visit http://onlinebusinessbasics.com/article.html
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