It seems everyone is trying to make a living online. And as businesses are started, and products and services are put up for sale, there’s usually a common question in the not too distant future: how do I get paid? Considering the hazards of checks and money orders, the most logical choice is to start researching merchant accounts. If you’re seriously thinking about getting into the burgeoning Internet marketplace to make your fortune, here are 7 things to know about online merchant accounts.
1. What is a merchant account? It’s nothing more than a way for someone to buy from you and getting you paid. Typically a merchant account is divided into two separate services. One collects the payment and make sure it clears. In other words, they verify that the credit card or debit card is good. The second part actually gets the money to pay you what you earned.
2. They can cost a tiny fortune between fees and surcharges. Make sure your read the terms and conditions and anything else that you need to sign. Seriously. The smaller the print, the more time you should spend reading it! Make sure you know what you will be charged in discount points. Don’t get excited – you aren’t getting a discount. Your are paying a percentage of your sales to the company(ies) clearing the payments. These points can be as low as 1.9% and reach highs of close to 6% or more. American Express has historically charged the most to use their card, which is why many retailers have stopped accepting Amex cards.
3. Read the fine print. (Did we say that already?) Many of these accounts are more concerned with the money they collect from you rather than providing a service to you. Before signing anything, make sure you aren’t locked into a contract with a heavy penalty for early cancellation. Sometimes you may end up in a two year commitment without knowing it.
4. Look for things in the agreement that talk about automatic checking account debits and charges. They already have your checking account information because that’s where they deposit your earnings. Just make sure they don’t plan on charging monthly maintenance fees or anything else they can conger up.
5. Let’s say you didn’t sell a minimum of $500 last month. You might see some odd and very high charges on your monthly statement! The less you make, the more they charge!
6. It can take over a week in some cases to actually get paid! If you’re used to using PayPal, forget those days!
7. And rest assured, during your worst month in business, you will log on to see your checking account activity one morning only to find that you are overdrawn and heavy fees have been assessed by your bank! What happened? A customer wasn’t happy and went to his credit card company to complain. Without even asking for your side of the story, the money is taken away from you. If you’re selling products or services for substantial amounts of money, this can put you out of business if you have lost your operating capital. It can months to provide paperwork and information proving that the customer is wrong. And in many cases it won’t matter. Merchant account companies don’t give a blast about you, the merchant!
If you really want to check out a merchant account, stick with well known processors.
If you’re seriously considering getting into the Internet marketplace to make your money, we have got the inside scoop on internet marketing and credit card processing accounts .
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