- You can get your own Visa/Mastercard/AmEx/Discover accounts with a local bank.
- You get Visa/Mastercard/AmEx/Discover accounts through a broker (these brokers are all over the country).
- You can hire a fulfillment house and use their credit card accounts.
- You can use a payment type such as Cybercash or First Virtual.
- You can use a third party billing company (in other words, use someone else's merchant credit card accounts for a fee).
Details of #1: If you have a very good relationship with your bank, and they don't require a security deposit, it is best to get the merchant credit card accounts through them. Because some banks only deal with two out of the four major credit card types, you may have to deal with two different banks to be able to process all four major credit card types (usually one bank will have Visa and Mastercard, and another will have AmEx and Discover).
The problem with local banks is they are set up to serve retail stores and not mail order or Internet based businesses so they either charge a very high "discount rate" or require a very large security deposit (between $5,000 - $10,000). For those that don't know what a discount rate is, this is the percentage you pay on each transaction for the privilege of using their credit card services. In other words, if you have a discount rate of 2.5 % and you put through a sale of $100.00 you will only receive $97.50 and $2.50 goes directly to the credit card company.
Details of #2: Going through a broker is my personal preference. It is usually very easy to get approved, there are no security deposits required, and they can get you a great discount rate. I personally recommend a company called Total Merchant Accounts.
They are Internet based and you can apply directly online. They specialize in getting credit card accounts for online businesses (even adult oriented sites). They have a 98% approval rate. Even if you have been bankrupt, chances are that they can probably get you approved. We have had great success and I highly recommend them. They charge a $125 application fee (all brokers charge a fee to set you up this is how they make their money don't worry, it is fully refundable if you are declined). Some others charge as much as $400.00.
The only other expense will be that you need a terminal, software product, or web-based software (whatever you decide) to process the credit cards (yes, this software will process the credit cards in real-time, all automatically, just like my order system does that I explained above). You can buy this outright for about $900.00, but you can also lease it from them for about $40 a month (this is what we do and this is what I recommend you do). You should be able to get a discount rate of 2% to 3%. So basically you get merchant accounts for $125 up-front and $40 a month. This is very cheap. If you plan to do business online, this is the best way to go. What is $40 a month if you plan to be generating thousands in sales each month?
If you don't want to use Total Merchant Accounts, there are literally hundreds of different brokers out there. However, be careful as there are a few that will take your application fee and give you the run-around. We recommend Total Merchant Accounts, as they specialize in online and home based business and we have used them for years with great success (plus they will bend over backward to help you). Click here for their online application form.
This form is not a "formal" application. It goes to Ed Freeman at Total Merchant Accounts (which is the "broker", not the "bank"). This is to help him understand what type of business you are in and a little about your company (so he knows the best way to fill out the formal application that goes to the bank for approval). Just fill out this "pre-application form" at the URL above as best you can (if you leave a few fields blank, don't worry, the bank will never see this "pre-application form"). Once Total Merchant Account receives your pre-application by email, they will contact you within 48 hours to go over some specifics and get out a formal contract to you so that they can set up the details with the bank. It is super easy and takes almost no time at all. I highly recommend them.
Note: As mentioned above, you will be required to lease a processing terminal to "swipe" the credit cards. You have the option of a stationary terminal or a software program called Total Merchant Manager. Make sure you lease the software as this will allow you to render credit cards through a secure server as well as process them manually through your home computer. Don't worry, this is simple software to operate.
Details of #3: A fulfillment house is a company that is designed to do all your "dirty work". They will take your orders through an 800 number with live operators who will keep track of your customer data base, provide some customer service, process credit cards, and ship out orders. In other words, they make running your business completely hands free. These companies have their own merchant credit card accounts and will let you use them to process your orders for a fee. The fee is usually a 5%-6% discount rate instead of the normal 2% to 3% you would pay if you had your own accounts.
If you are only processing a few thousands dollars worth of orders every month, this is the way to go. But if you are doing more business than that, it is more cost effective to get your own, merchant credit card accounts. Also, please note that most fulfillment houses will only allow you to charge orders to their credit card account when the orders come in through the 800 number line (they will not let you use their credit card account for direct sales from the Internet), which can cause problems if you are doing any kind of volume.
As mentioned we deal with MWC at (1-800-642-9378). Ask for their sales department, they are great and will help you to the best of their ability.
Details of #4: As I mentioned above, I do not recommend using a "transaction company" as it is just to much hassle for the amount of sales you will lose (which will be almost nil).
