Why You Don’t Have To Have A Merchant Account

When you start a new online business and sell a product or service of your own, one of the things the experts often tell you that you need a merchant account to do business online.

Well, that’s simply not true.

While there are certain circumstances where a merchant account may be necessary, for the majority of online businesses, it’s just an unnecessary expense… especially when’ you’re first starting out.  I’m going to tell you why you don’t have to have a merchant account.

1. Setup Fees:

Merchant accounts cost quite a bit of money to set up. This will often run you $150 or more. Some services will waive this fee, but they will usually hit you with a higher monthly fee or transaction fee. If you want to accept checks online, you’ll usually have a setup fee for that too.

2. Monthly Fees:

There are several monthly fees associated with having a merchant account. Gateway fees, statement fees, customer service fees, etc. If you want to take checks, you’ll also have to pay additional fees for that service.

3. Transaction Fees:

If you process payments through your own merchant account, you must also pay a percent of the transaction as an additional fee. This is called a transaction fee and usually runs you around $0.30 per transaction. Again, eCheck counts as a second service and each check you accept online also incurs a transaction fee.

4. Discount Fees:

You’ll also have to pay a discount fee which is usually about 2.5% of the transaction amount. Ditto for eCheck.

5. More Accounting:

When you have a merchant account, you have a lot more accounting responsibilities. With most systems, each transaction must be specifically added to your ledger. You can often download and import the numbers into your accounting program, but it’s still a pain to keep track of it.

6. Payment Gateways and Shopping Carts:

You have to purchase or rent additional software to process online payments, specifically a payment gateway and shopping cart.

According to one merchant account company I found online, these are the industry standards for just some of the fees:

Setup Fee: $100- $500
Payment Gateway License Fee: $199
Application Fee: $50- $295
Discount Rate: 2.0%-3.95%
Transaction Fee: $0.25-$0.50
Statement Fee: $10-$25
Internet Gateway Fee: $10-$20

So clearly a merchant account is pricey and maybe a little bit inconvenient, but is there an alternative?

Absolutely!

There are tons of third party payment processors available online.  They will process credit card, and sometimes check, payments for you and then deposit the money in your bank account or send you a check.  Of course, there is a small fee for this service, but it is usually very competitive with the cost of going through your own merchant account, there are often no setup fees, and it’s a lot more convenient.  Plus you don’t have to worry about payment gateways and shopping carts!

In the end, new online businesses and websites rarely need their own merchant accounts when they are first starting out.  Getting a merchant account proves to be too much hassle and too costly to the new online business owner.

Once you’ve been doing business online for awhile and are earning substantial revenue selling your own products and services, then it may be time to look into getting your own merchant account.

Want to know more about operating a successful online business?  Get your Free Copy of 10 Days to Smokin’ Traffic Now!

Related posts:

1. Rip-Off Report: Watch Out For Article Marketer
2. Why Don’t SOME Affiliate Products Sell?
3. Boy Did Google Slap Me Hard!

Tagged with: creating ebooks • customer service • info product creation • make money • merchant account • shopping carts

Filed under: Free Content • General Online Business • Online Mistakes • Product Creation • Working From Home

Like this post? Subscribe to my RSS feed and get loads more!