If you've ever looked into getting your own merchant account, you already know how expensive it can be. Application fees, setup fees, standard monthly fees, transaction fees... they all add up fast! It can be too much for a business that's just getting started.
There is an alternative. Third-party credit card processing companies handle your credit card transactions for you in return for a cut of your profits. Setup is typically either free, or there's a small, one-time fee.
Here's here it works: once you've applied and/or been approved and paid any applicable setup fees, you create ordering links for your products. These ordering links lead to third-party processor's server, where they handle orders on your behalf. Credit cards and online checks are common ordering options provided by third-party processors. Some also offer a telephone ordering option.
After your customer places an order, that sale is automatically credited to you, minus company's commission. You are paid by third-party processor at regular intervals, according to their pay schedule.
So what's big deal? Why would third-party processors appeal to startup businesses? Aside from setup fee, you are only ever charged IF and WHEN you make a sale. If you don't sell anything, you're not charged anything.
Here are a few things to consider when researching third- party processors:
* How much is setup fee? Don't be put off if there is one; three of four processors I use charge a setup fee, and they've been well worth small cost.
* Transaction fees. After paying these fees, do you still make a reasonable profit? I've seen fees ranging from around 5% to about 30%, with average somewhere in middle.
* Are there additional fees for accepting online checks or telephone orders? Does processor even offer these as options?