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  1. #1

    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.

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

    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!
    Last edited by hekwu; 12-07-2003 at 03:15 PM.
    Windows 8 to Linux: I'm MUCH better than you. Eat my dust!

  4. #4
    Join Date
    Aug 2003
    Posts
    833
    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. #5
    Join Date
    Jan 2002
    Posts
    428
    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. #6
    Join Date
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    yep thats what I do. Plus free transfers between accounts at my bank and its almost instantaneous.
    Patron: I'd like my free lunch please.
    Cafe Manager: Free lunch? Did you read the fine print stating it was an April Fool's joke.
    Patron: I read the same way I listen, I ignore the parts I don't agree with. I'm suing you for false advertising.
    Cafe Owner: Is our lawyer still working pro bono?

  7. #7
    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. #8
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    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
    Windows 8 to Linux: I'm MUCH better than you. Eat my dust!

  9. #9
    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. #10
    Join Date
    Aug 2003
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    833
    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. #11
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    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...
    Windows 8 to Linux: I'm MUCH better than you. Eat my dust!

  12. #12
    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. #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.
    Windows 8 to Linux: I'm MUCH better than you. Eat my dust!

  14. #14
    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. #15
    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.

  16. #16
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    For most startups 3rd party is the practical solution.

    Some people swear they pay very low for merchant account/gateway options, if my memory did not fail me, it is something like $10.00 a month without setup. I am not sure how this rate is possible, but never to my current knowledge a Canadian merchant (webhost startup) can enjoy those low fees. Will there be a small print to say you have to pay $?K to cancel your account within x years.

    But to some small/medium business, less than a hundred $ a month is a small price to pay.

  17. #17
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    Hi eFarmer,

    Yes, it is most definitely possible for U.S. merchants to get a free (or very low) setup cost and very low flat monthly costs on their merchant processing from a number of different providers.

    And... you are RIGHT ON when it comes to things like cancellation fees and other "fine print" fees. This has been the cause of a lot of frustration for many merchants who sign up expecting one thing and end up getting quite another.

    Merchants should try to avoid having a cancellation/termination fee whenever possible to protect themselves. Some companies will waive these and some won't but it is also important to ask.

    After all - if a company is truly confident about their support & service, then they should be able to retain the client based upon that as opposed to some contractual "lock in", right?

    Unfortunately, it is not uncommon for some providers to offer what -seems- to be a great deal only to have a ridiculous cancellation penalty in place. Or for them to charge you a monthly minimum that ends up doubling your anticipated monthly cost.

    I have personally spoken to one such company - and no, it is NOT one of the companies frequently mentioned here in this forum - and they basically told me that "yeah - we have real good rates but we really stick it to 'em on the cancellation policy" (sheesh!)

    So... definitely be careful with any merchant provider who doesn't disclose or wants to charge you a termination/cancellation fee and really drill down on those details. And get it in writing if they say they will waive it.

    The other thing to watch for are other hidden fees. Annual fees, for instance, are one cost component charged by many companies. Sometimes they go under different names. There is one company that has an annual fee but calls it a "risk assessment/analysis fee" for instance.

    Last but not least, it is VERY important to ask about their risk management policies. The best price in the world doesn't matter if your funds are constantly held or frozen or your account is turned off because you happen to get a chargeback or two.

    And of course... being that this is probably one of the most important decisions a merchant will ever make - always ask for references so that you can check out first hand how they have worked for similar types of businesses.

    In other words... contract terms & risk management & reputation are just as important as getting a great deal on the price side.

    After all, if you hire a doctor to perform heart surgery on you - are you going to pick the one with the most expertise? Or just the one with the lowest co-pay?

    Hope that info is helpful!
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
    Many thousands of successful, growing businesses benefit from our expertise every day. You can, too!
    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
    Learn more today at http://www.cdgcommerce.com - we look forward to helping your business grow!

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