Hello Everyone,
From the merchant account provider side of the fence I`d like to offer my observations regarding 3rd party accounts like paypal vs. direct merchant accounts. In my experience, paypal and other payment alternatives, seem to work well for start up ecommerce and low volume sites. However, there are many issues like many have you have already brought up and I will not rediscuss what`s already been said. Instead, I`ll give my perspective from my experience.
Typically speaking, it`s like Nikole and others have already stated. Business don`t jump out of the gates and get a merchant account because of the fees. Especially in the beginning when funding is tight. However, the pricing that you get on a merchant account is tied directly with the company/representative that you deal with. See below the type of pricing I give to my clients:
The #1 online payment gateway for merchant accounts is Authorize.net. Authorize.net is the payment gateway and attached to that is the merchant account.
Authorize.net Online Payment Gateway with Virtual Terminal:
Application/Set Up Fees: Waived
Visa/MC Base Rate: 2.19% (This rate includes keyed consumer card with an AVS match)
Visa/MC Non Qualified Rate: 3.19% + $0.10/transaction (This rate includes keyed consumer cards without an AVS match as well as business/corporate and international cards)
Transaction Fee: $0.25/transaction (Includes internet transaction fee)
Interchange Pass Through Credit/Debit: $0.00
WATS/Auth Fee: $0.00
AVS Fee: $0.00
Batch Fee: $0.00
Monthly Basic Service Fee: $8/month
Monthly Online Gateway Fee: $5/month
Contract Term: Cancel at any time without penalty
When looking at the pricing above, you`ll notice that I disclose all fees associated with the account unlike most companies. Most companies do not disclose all fees associated with the transaction such as the AVS fee, Internet transaction fee, etc. The main concern is usually the monthly fee associated with a merchant account. In my pricing program above, if you did $0 in credit cards in any given month you`d only pay $13 for the service. Most companies have a $5-$10 statement fee and a gateway fee of $5-$20/month and a monthly minimum of $15-$25/month.
I hope that this information helps some of you. If you ever have any questions, please don`t hesitate to contact me.
Good topic Nikole!