‘Free’ Accounts or Merchant Accounts?
Anyone who does business online (and actually takes money from other people) should, at some point, bite the bullet and choose a credit card processing company - this can be a very expensive decision.
There are two different ways to do this; you can go to free accounts or specific merchant accounts.
But what is there to separate the two? After all, do they both agree that you should accept payment in credit card rights?
Yes, they both allow you to receive payments from people with credit cards - but there are some basic and important differences that you need to be aware of.
Let’s take a look at merchant accounts (ICAnn, WorldPay or 2Checkout - as examples), when you sign up for one of these guys you will need to provide information related to your business and prove that you are actually a registered business.
You will also have to pay a setup fee, from personal experience I know this may follow a few hundred dollars, and you will have to pay an annual subscription or support fee - and this is usually a few hundred dollars a year.
You may think this is OK - but don't forget that you also pay a percentage of the workload, this could be anything that has gone up by 4.75%.
Only with this information can we see that for a young boy, this is a high cost - especially if you are just starting out and do not know if your product / service will go away.
There are other things you need to be aware of when looking for professional merchant accounts, for example, 2Checkout will try, from time to time and call your customers (optional) and make sure the goods have arrived - if they can. They do not do this, then they will be able to return all sales for now.
I say this as I was informed of 2CO's operating policy (this morning) by one of my online advertisers - this guy lost $5,000 because 2CO phoned the wrong person and agreed, once you delivered the products and got a refund. How many people will say 'Yes, here are my credit card details' - and this is almost impossible - and then cancel the merchant account without apologizing.
So in other words, make sure you read the good texts - there are often things there that you are not really interested in.
However, that is enough about merchant accounts, now let's consider free accounts - and the first thing to note is that nothing is 'free'. For free accounts you usually do not pay a setup fee or an annual fee - but you pay a percentage of the transaction amount, this can be anything from 1.5% to 4%.
The two main providers of free accounts are PayPal and StormPay. It should be noted that although both offer very similar services, there are advantages and disadvantages associated with one of them.
For example, StormPay usually charges a small fee for each transaction and then for PayPal - but PayPal charges more to withdraw your money and then StormPay. PayPal is also VERY QUICK to respond to allegations of malicious play (whether it exists or not) and is usually slow to do anything about it (without locking your account).
PayPal also has strange habits when it comes to money laundering laws, for example my little brother plays on Ebay and makes a few dollars here and there - nothing suspicious about that right (especially seeing that Ebay owns PayPal) but for some reason when it belongs to him. The balance exceeded $50 they closed his account for a few weeks and sent him emails asking for proof of identity and demanding an explanation of where the money came from.
There are no such problems with Storm pay, they guarantee you if you register by successfully linking you with your credit card at your address - any suspicious transaction is gently tracked. Since the time of writing, I have never heard of a Storm Pay user locking his account for questionable reasons.
In terms of subscribing to the service StormPay is very fast and with the fullness of the market it is also going up (PayPal is the default process but StormPay is holding fast).
One thing to keep in mind no matter what type of processor you are using is that if the customer wants a refund 9 out of 10 times he will get it - unless you can convince your processor to do everything he wants (so with PayPal when sending tangible goods you need post proof proving what) you have also sent in the case of alleged 'not delivered' proof of receipt - and there is no guarantee that they will rule (at your discretion).
One important difference between payment processors will be related to the country, i.e. where in the world they receive payments. Most free services do not accept payments from Central Africa or Southeast Asia, this is completely related to the level of fraud (Just think Nigeria).
In summary, for a brand-new business with little or no customer base and not knowing that its offering will be taken up by the market it is best to start with a free account, my personal recommendation Storm Pay. If your business later grows and requires the performance of a particular merchant account, you can always develop or choose one in the market.
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