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Own Merchant Account Vs. 2CheckOut/Paypal: Please advise

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  #1  
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Question

Own Merchant Account Vs. 2CheckOut/Paypal: Please advise


Hello EveryOne,

We want your input before making the final decision. Thanks for your time. We have been approved for our own merchant account for our "International" Dating sites network at the follwing rates:
-----------------------------------------------------------
Visa/MC = 2.19% + 25 cents/transaction
Amex/Discover/Diners = 2.95 + 25 cents/transaction

For International transactions = add 1.59% to all the above rates.

- We are approved for $7000/month max at this time.

Other fees are:

- $149 for authorize.net software
- $20/month for gateway and statement
- About $100/year other membership fees.

JCB/Novus/CarteBlance cards NOT allowed.

e-Check option: $200 setup fees, $25 monthly fees, 2.2% + 30 cents per transaction fee. Need separate application
-----------------------------------------------------------

Now if we go with 2checkOut and Paypal:

----------------------------------------------------------
2CheckOut:
We have just finished integrating with 2CheckOut.com which offers all card types mentioned above including e-check, but the overall rates are about 2.5% higher. No monthly fees.

PayPal:
- Almost same great rates offered (as the own Merchant Accout).
- Well known among younger generation (good for dating biz) and 35 million members worldwide.
--------------------------------------------------------

Our 'almost final' Decision:

We are thinking of offering both 2CheckOut and PayPal to our customers due to: Convenience, Most payment options available worldwide, No separate dealing with card/e-check companies.

- 2CheckOut's 2% higher fees can be offset by no monthly fees. Plus more payment options mean more sales.

BUT My "Biggest Concerns" still is:

- People may not always recognise the charge and it may sometime result in chargebacks especially in case of PayPal.
- Not concerned with 2CheckOut.com as our company's name will appear along with 2CheckOut on customer statements.

My Questions:

Q: Do you think the chargebacks will be much more using 2CheckOut/Paypal than 'our own Merchant Account'?

Do you think we are making a right decision to go with 2CheckOut/Paypal combination?

Thanks a lot.

Rick Kumar


Last edited by rickkumar; 12-07-2003 at 04:17 PM.


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  #2  
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I don't know if the chargebacks would be more Rick, but my personal recommendation would be to use your own merchant account along with a Paypal option.

  #3  
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Re: Own Merchant Account Vs. 2CheckOut/Paypal: Please advise

Quote:
Originally posted by rickkumar
My Questions:

1: Do you think the chargebacks will be much more using 2CheckOut/Paypal than 'our own Merchant Account'?

2: Do you think we are making a right decision to go with 2CheckOut/Paypal combination?
1. Depends on the number of chargebacks and how much they are with your merchant account. Do you mean will they be more since 2checkout will be in the picture? No. Most people when they look over credit card statements, look at the date and charge amount and (normally) remember what the service is for. Be sure to tell them you use 2checkout. Be sure your telephone number is listed. I list my number and out of the 1000's of transactions, only 2 people ever called me... then they remembered what the transaction was for and I did not have a chargeback.

2. Who knows! It might be good combo for your business if you are making less than 1000 per month. Anything above that and you might do better with a merchant account. Most merchant accounts also require a 1 year contract, so be sure you will be in business for at least one year, otherwords, don't go into this without knowing you are going to go full steam for one year, under a merchant account contact. 2checkout/paypal combo you can drop at any time.

Also, I'd bet, most people will use the merchant account before paypal! I also have paypal listed on my sites and no one ever use. Only use of paypal is from my auctions at ebay.

Good luck!

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Last edited by hekwu; 12-07-2003 at 03:15 PM.
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  #4  
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Your target market may play a role in your choice.
Are your clients comfortable to have your company name listed on the cc statement. Some biz you prefer your company name on cc statement while some not.

With phone number listed on cc statement will avoid most chargeback due not sure who the merchant is. For other intentions of chargeback, almost nothing will stop them.

Your biz volume is also another consideration, for startups that are uncertain that the volume will go beyond $x (maybe $1,000, maybe $2,000 depends on fees) a month, merchant account may not be practical.

Personnally, I would prefer a merchant account if practical as usually one account is only needed for multi-sites and recurring billing may be more convenient to set up is using billing management scripts.

  #5  
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link your paypal account to an empty checking account and trafser funds from Paypal-->empty checking-->real checking IMMEDIATELY. Paypal has serious fraud issues.

  #6  
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yep thats what I do. Plus free transfers between accounts at my bank and its almost instantaneous.

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  #7  
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See this post for some additional PayPal Info, If your going to be doing any high volume you might want to stay away from PayPal.



http://www.webhostingtalk.com/showth...hreadid=213926

  #8  
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Quote:
Originally posted by pixel_fenix
yep thats what I do. Plus free transfers between accounts at my bank and its almost instantaneous.
Please ensure you don't have *free* overdraft between accounts... most banks will automatically place this on your account (I know Bank of America will anyway ) You will need this feature turned off or if someone does get into your paypal account and request money the paypal checking account will take all funds, then overdraft will kick in and suck the rest of your accounts.

Then you will be

While the thief is

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  #9  
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Thanks for all the responses.

2CheckOut is good but frequent DDOS attacks are a little concern.

Re: our own merchant account, the total fees will be about $1100 (400 for setup + $60 per month for both authorize.net/e-check together) is OK.

What scares me is that we may then have to deal with so many different companies for e-check and credit cards which may be difficult as we are just starting out and we don't have big staff.

On the other hand 2CheckOut is kind of no headache - just deal with 2CO and no monthly fees.

May be we will just go with 2CheckOut alone as people always talk about fraud at Paypal.

Still confused.....Will take couple more days to decide.


  #10  
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Other considerations:
> signup any script if any - what payment it support
> is it subscription base is yes, will your management script use the payment type properly.

  #11  
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Quote:
Originally posted by rickkumar
Re: our own merchant account, the total fees will be about $1100 (400 for setup + $60 per month for both authorize.net/e-check together) is OK.
Those fees seem very high - $400 setup... my fees were only $99 for a merchant account... that was a couple years ago. On this site (I don't remember the thread) I saw no setup and around the same % as my merchant account. You might want to shop around. Or maybe for the total package that is right... I dunno, just making a suggestion...

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  #12  
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Quote:
Originally posted by hekwu
Those fees seem very high - $400 setup... my fees were only $99 for a merchant account... that was a couple years ago. On this site (I don't remember the thread) I saw no setup and around the same % as my merchant account. You might want to shop around. Or maybe for the total package that is right... I dunno, just making a suggestion...
$400 = $149 for authorize.net setup + about $200 for e-check setup + $50 miscellaneous

I guess we can just go with 2CheckOut at this time and later when we have over 100 subscription paying members, we can then move to a real merchant accout.

It be much easier to get better rates and fees at that time with our business history. Right now merchant account providers just want to rip you off.

This merchant accout offer is the best we ever had. All other were quoting sky high rates and monthly fees as they claimed that dating services is in the group that has more chargebacks than normal. Plus they were putting so many other conditions as well.

Lets see.....still thinking couple more days.

  #13  
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Oh, yea, that does sound right. I did not factor the echeck setup... I don't have that.

I agree that you should wait until you have the money coming in... that is what I did.

But I did not have subscription paying members... that is another factor you will have to consider, how easy will it be to switch 100 subscription members to a merchant account if they first were put on with 2checkout?

You have the answers anyway... you, and only you, know what is right for your business and situtation.

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  #14  
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Rick, the question that you're asking is a great one. I was using 2checkout exclusively for about 6 months when it was near impossible to login to your account because of "heavy server load". So I immediately applied for a Merchant account as soon as I could. I started moving some clients over one by one, but realized there are so many small issues to take care of with a merchant account including cryptic gateway errors, fraud screening, properly debiting cards (all of which I don't want to have the headache of dealing with). I never thought I'd say this, but the extra 2.5% you pay 2checkout looks like it's worth it because you have to do very little work on your end, and they finally have a robust back-end, although it's very frustrating to get your payments at their schedule.

  #15  
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Quote:
Originally posted by airpal
Rick, the question that you're asking is a great one. I was using 2checkout exclusively for about 6 months when it was near impossible to login to your account because of "heavy server load". So I immediately applied for a Merchant account as soon as I could. I started moving some clients over one by one, but realized there are so many small issues to take care of with a merchant account including cryptic gateway errors, fraud screening, properly debiting cards (all of which I don't want to have the headache of dealing with). I never thought I'd say this, but the extra 2.5% you pay 2checkout looks like it's worth it because you have to do very little work on your end, and they finally have a robust back-end, although it's very frustrating to get your payments at their schedule.
I thought about it a lot and 'these headaches' are really what I am concerned about with my own merchant accout.

2.5% more also save you a lot of work which otherwise may cost you.

My merchant account people say if I need the fraud screening from authorize.net then it will cost me additional $20/month + 20 cents per transaction.

So now altogether I am looking at about $70/month fees for everything including statements, gateways, e-chect gateway/statement fee, fraud screening fees.

So my rates even though are 2.19% +25 cents actually will end up about 3.5% +45 cents (additional 1.59% for international transactions + 20 cents for fraud screening per transaction) + $70 monthly fees + about $350 start up fees for software and application fees

+

all the headaches to deal with all those card and e-check people.

And if you look at 2CO or PaySystems etc. they have it all free.

At the end of the day if you really llok at it from a small biz point of view, 3rd party processors do make sense.

Just my personal opinion.

Thanks.

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