How To Find the Best Merchant Account For Your BusinessDiane Hughes What a great idea! Start accepting credit cards and watch your profits soar. Nothing could be simpler. Or so you thought until you began researching merchant accounts. It can all get extremely confusing. There is an easy way to find the best deal that suits your business. Youll be able to compare apples to apples and have a clear picture of what the merchant account will cost you. Lets take a look at some of the phrases youll encounter in laymans terms when you begin to search for a merchant account.
I know what youre thinking! But dont give up before you start. Remember, Im going to show you a way to decipher all this information. Choose a number -- any number. This will be the total number of transactions you think you might conduct during the course of a year. For our example, well use 100. Next, choose an average transaction amount for your product or services. Well say $175.00 for now. Finally, well calculate a years worth of charges by using the amounts above and within the definitions. Set Rate Charges: Set up Fee = $65.00 one time only Gateway Fee = $10.00/mth Statement Fee = $15.00/mth Annual Fee = $25.00/yr Then multiply your estimated number of transactions by the $ .35 per transaction fee. That equals $35.00. Next, multiply the average transaction amount $175 by the discount rate of 2.25%. That equals $3.94. Youve estimated that youll have 100 transactions per year, so again, multiply the $3.94 by the 100 transactions. The total equals $394.00. All that is left is to add them all up. Set up Fee = $65.00 one time only Gateway Fee = $10.00 x 12 months = $120.00/yr Statement Fee = $15.00 x 12 months = $180.00/yr Annual Fee = $25.00/yr Per Transaction Fees = $35.00/yr Discount Rate Fees = $394.00/yr Total Fees & Charges For One Year = $819.00 Lets look at one other quick example just to show you that looks can be deceiving. This company offers the following rates: Set up Fee = FREE Gateway Fee = $15.00/mth Statement Fee = $10.00/mth Annual Fee = FREE Per Transaction Fees $ .30 Discount Rate Fees = 2.35% Software Lease = $24.95/mth Based on our same $175 average transaction and 100 transactions per year, we come out with the following figures: Set up Fee = FREE Gateway Fee = $15.00 x 12 = $180.00 Statement Fee = $10.00 x 12 = $120.00 Annual Fee = FREE Per Transaction Fees 100 transactions x $ .30 = $30.00 Discount Rate Fees = $175 avg. transaction x 2.35% = $4.11 x 100 transactions = $411.00 Software Lease = $24.95 x 12 = $299.40 an additional fee our first provider didnt charge Total Fees & Charges For One Year = $1040.40. Even with free set up and no annual fee, this company still charges over $200 per year more than the first merchant account provider we previewed. Be very careful - the word "free" can often times be deceiving. Merchant accounts can open a world of new business for your company. They can provide a very convenient way for your clients to pay - and for YOU to get your money. However, when you shop for a merchant account, be sure to use a standard unit of measure like weve outlined above to be very sure that you are getting the deal best suited for your company. Copyright 2004 Diane Hughes
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