A merchant account allows you to accept credit cards as payments. Unfortunately, most Merchant Account providers ask for $30 a month in a flat fee, in addition to per-transaction fees as well as a percentage of each transaction. Is there a better solution for the small business that rarely uses credit cards?
Until recently, I had a Merchant Account with TransFirst ePay which worked well for the better part of a decade. They charged me $15 a month to have the account, and took a percentage (about 2.5%) of each transaction, when I processed a credit card payment.
Why do I need this? Well, I do work for the Government, and they like to pay by credit card, as it avoids the need for purchase orders and a lot of paperwork. So accepting government credit cards is necessary to accept government business. I also get paid by credit card from a few clients on occasion, as well as a few clients from overseas who wish to use credit cards.
But on average, I might do one transaction a month - or every other month - for a few thousand dollars. Paying $15 a month for the option to do this seemed kind of steep. And as time has progressed, I am seeing less and less credit card payments to justify the expense.
But then TransFirst raised the monthly fee to nearly $30 and then started tacking on quarterly fees, as well as "Internet Insurance fees" and suddenly, I am paying $300 to $500 a year for the privilege of being able to take credit cards, even as my volume of credit card business drops off.
I closed my TransFirst Account and started looking for other options.
PayPal seemed like one option. My relationship with PayPal goes way back - to the wild west business of the early Internet days, when PayPal was sort of a loose cannon. But since those days, they have cleaned up their act, and hopefully are not "too evil" anymore.
PayPal virtual terminal seemed like one option - but an expensive one - they also wanted $30 a month to set up an account.
But PayPal does have another option - which has no monthly fee - which allows you to set up a "Buy Now" button (which I changed to "Pay Now") on your website to accept payments for items, for fees, for subscriptions, for recurring expenses, and even for donations. The great thing is, there is no monthly fee for installing this button on your website:
All our costs are out in the open. You pay a fixed percentage and a low transaction fee on every sale. No hidden charges.
- No monthly fee
- No monthly minimum
- No setup charge
- No cancellation chargePricingYes, you might see lower rates published elsewhere. But keep in mind that with PayPal there are no extra costs like setup charges, monthly fees, downgrade penalties, or cancellation charges.
YOUR MONTHLY SALES YOUR FEE PER TRANSACTION EXAMPLES $0.00 USD to $3,000.00 USD 2.9% + $0.30 USD $3.20 USD fee on a $100.00 USD sale $3,000.01 USD to $10,000.00 USD 2.5% + $0.30 USD* $2.80 USD fee on a $100.00 USD sale $10,000.01 USD to $100,000.00 USD 2.2% + $0.30 USD* $2.50 USD fee on a $100.00 USD sale > $100,000.00 USD Call 1-888-818-3928
The only downside, is that the buttons only come in a number of flavors - "Buy Now", "Add to Cart", and "Donate". The first two have fixed prices for individual items or a limited number of items - so it is hard to take payments for odd amounts.
The "Donate" button works for any amount the user chooses to enter, and since you can change the button appearance, you can change it to say something other than "donate". However, when the user clicks on the button, it goes to a page asking them how much they wish to donate.
The "Buy Now" button could be a real asset to someone selling individual items on the web, particularly if they do so only occasionally, and want to be able to accept credit cards.
In all three cases, the button takes the user to the PayPal site, which then asks them to log in. The user has to click on "Pay by Credit Card" if they wish to use that, instead of PayPal. The charge then appears on the client's statement as "PayPal-YOURNAME".
It is a bit of a kludge fix, but at a savings of at least $400 a year in fees, one that I think is worthwhile. I am going to try it, anyway, at least for the time being.
Why should it be so hard to transfer money from one person to another - and why should it cost so much?
If you have a PayPal account, it takes literally a few minutes to set this up. You select the button you want, edit it, if necessary (you can change it later on, add more buttons, whatever) and then PayPal generates the HTML code necessary to insert the button. Cut and Paste this using Windows.
Using your HTML editor, you can then insert the button into your web page or even a blog page. And that's it. You are in business and can accept credit card payments. Not hard to do.
One interesting note: I use Google sites for my website. It is cheap, easy to use and free - all things I like. However, when I embed the PayPal "gadget" into the google site, the google site "corrects" the HTML so that the pay button doesn't work. Funny how that works.
Google does helpfully offer to embed the Google "Pay Now" gadget, however. Don't be evil? Perhaps Google needs a new motto - "Don't be Evil, unless you are trying to screw a competitor."
Oddly enough, I can embed the button in a Blogger page - and Blogger is owned by Google. Go Figure!
Anyway, I'll try this for a few months and report back as to how it works. Saving $400 a year or more is something I like.
* * * *
Sounded too good to be true, and it was.
PayPal limits the transactions using this technique to $2000 per credit card. At that point, the person is prompted to "set up a PayPal account" and become "verified" before accepting the payment.
Soooo... it looks like this is not a workable solution for enterprises.
For buying and selling $10 items on eBay? Yea. Otherwise. No.