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  1. #1

    Question Surprising the number of companies without a merchant account and SSL problems

    I was going through the board and looking at some of the more respected hosting companies around here and something really started to stick out to me.

    Very few seem to actually have merchant accounts and instead go through PayPal, 2CheckOut, PaySystems, etc.

    Now, for smaller start-ups, I can understand this. The time and cost of getting a merchant account can be cost prohibitive and having one can cut into profits initially, but when you get bigger, the savings of having your own is self evident.

    For example, HostNexus obviously is doing well for themselves if they can afford a Coenex design, however they use PayPal and PaySystems. CredibleHost only uses PayPal. HTTPme.com only uses PaySystems. SprintServe uses PaySystems. The list goes on and on. UnitedHosting uses Paysystems as well.

    Then other problems like HostRocket gets an error which says that the SSL page contains secure and non-secure items. Dixiesys has an expired SSL certificate from December 2003.

    These are all companies that I highly respect, so I'm certainly not saying anything negative towards any of them. I'm just wondering, what's the deal here? It is continually said over and over to people on these forums that when you use a third party payment processor, it gives your company an amateur feel. Problems with secure pages are even more of a problem I would think.

    So, I suppose the question is, why are these established companies going with a third party gateway which you have to trust and cross your fingers that they'll actually pay you when you can be in control of your own funds by having your own merchant account?
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  2. #2
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    Re: Surprising the number of companies without a merchant account and SSL problems

    Originally posted by Coach
    It is continually said over and over to people on these forums that when you use a third party payment processor, it gives your company an amateur feel.
    That's more often something that's brought up by other hosts in an attempt to slag competitors. Otherwise, the people that spew that stuff are the kind of folks who just love to get misinformed ideas. You'll be chasing your tail in circles trying to please those people. Best to leave them to their ideas.


    So, I suppose the question is, why are these established companies going with a third party gateway which you have to trust and cross your fingers that they'll actually pay you when you can be in control of your own funds by having your own merchant account?
    My company uses a 3rd party gateway. We like the extra fraud protection that it offers, plus the fact that dealing with credit card numbers in general can be daunting. Letting someone else do it removes a couple of added worries and makes things a little easier for us. That's worth a bit of extra money, I think. I don't have to cross my fingers. They pay every week like clockwork.

  3. #3
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    I've noticed this also. The only reason I can think of is cost savings.
    Personally, when I started up my hosting biz recently, I decided to buck the trend and started out immediately with a merchant account, SSL and TrustLogo "Point to verify". Of course, I already had an established computer consulting business that I am adding onto and can afford the extra expenditures.
    I can understand new startups using third party processors and not going for SSL, but I really don't understand why any established or large hosting company wouldn't go this route, it isn't that expensive.

    As for SSL pages containing secure and non-secure items...that's common in a lot of markets, not just webhosting. My bet is companies simply use the same template for all of their pages, both secure and non-secure, and don't bother to check their site on their public webserver.
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  4. #4
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    Sometimes when starting with a third party processor & they are doing a great job as Andrew is happy with his - why change? If it ain't broke, don't fix it. Plus a lot of times - it might take too much work / programming to change to another gateway & might not be worth it.

    As far as non-secure & secure items on the same page, this is just a common mistake made by the webmaster. All he / she needs to do is go in & tweak the code some. Depending on how she/he has the browser set up, he might not get the warning as some people do.

    And I have seen companies that just forget about their SSL. It is something that you really do not think about. It comes around once a year. Some people have a hard enough time remembering their anniversary, now you want them to remember to update their SSL cert? And that e-mail they might have been sent telling them to re-new, it might have looked like spam & was easily deleted or just did not make it to their inbox.

  5. #5
    There isn't any comparison between using a Merchant Account and a payment gateway as far as I'm concerned. Just the added control you get over charges, disputes, phone orders etc., make it an essential IMO.

    That said I also keep my 2Checkout account active and it still has clients that were not switched over to the Merchant Account. It's nice to have a backup.

    There is a lot of work involved in changing over a large number of clients to your own Merchant Account but I sure don't know why one wouldn't consider phasing out a 3rd party gateway and have all new sign ups use the Merchant Account. It could be that when you have thousands of clients on a 3rd party gateway it's too big a task to undertake. But then wouldn't all the money you would save with your own Merchant account be well worth it though?

  6. #6
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    Originally posted by tpt
    As for SSL pages containing secure and non-secure items...that's common in a lot of markets, not just webhosting. My bet is companies simply use the same template for all of their pages, both secure and non-secure, and don't bother to check their site on their public webserver.
    the company i work for loads the images on a non secure site because the server load would be too high for stupid advertisements and things.
    jubba joo!

  7. #7
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    Re: Surprising the number of companies without a merchant account and SSL problems

    Originally posted by Coach
    I was going through the board and looking at some of the more respected hosting companies around here and something really started to stick out to me.

    Very few seem to actually have merchant accounts and instead go through PayPal, 2CheckOut, PaySystems, etc.

    Now, for smaller start-ups, I can understand this. The time and cost of getting a merchant account can be cost prohibitive and having one can cut into profits initially, but when you get bigger, the savings of having your own is self evident.

    For example, HostNexus obviously is doing well for themselves if they can afford a Coenex design, however they use PayPal and PaySystems. CredibleHost only uses PayPal. HTTPme.com only uses PaySystems. SprintServe uses PaySystems. The list goes on and on. UnitedHosting uses Paysystems as well.

    Then other problems like HostRocket gets an error which says that the SSL page contains secure and non-secure items. Dixiesys has an expired SSL certificate from December 2003.

    These are all companies that I highly respect, so I'm certainly not saying anything negative towards any of them. I'm just wondering, what's the deal here? It is continually said over and over to people on these forums that when you use a third party payment processor, it gives your company an amateur feel. Problems with secure pages are even more of a problem I would think.

    So, I suppose the question is, why are these established companies going with a third party gateway which you have to trust and cross your fingers that they'll actually pay you when you can be in control of your own funds by having your own merchant account?
    We've got multiple merchant accounts, but are not using them yet. We're not prepared to move from a proven system to a new one until we are happy everything is 100% perfect with a new system, hence HTTPme using Paysystems and Voxtreme using 2Checkout.

    I'll be very glad when we do finally move as we'll save thousands upon thousands in merchant fees but we're not at the stage where we can move.... yet
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  8. #8
    Good luck with that Matt. I'd hate to be in your shoes during the transition. It will be a difficult process.

    The concern that I would have is that a company like McHost used PaySystems and blamed many of their billing issues on them. Whether that is true or not, I'll leave the community to decide. Then you have another third party processor like HostCharge from sometime back that many people here used (including UnitedHosting) and were left with thousands of dollars owed to them. HostCharge was seemingly a stable company... until the crud hit the fan of course.

    It just seems that going with a merchant account would be the safest route and you don't have to worry about another company going under.
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  9. #9
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    The handwriting was on the wall with HostCharge for some time prior to the meltdown. Of course, you can't really warn anyone about a feeling you get.

    It's unfortunate that people have to be taken in by these companies before naysayers (or naythinkers) are proven correct, but that's the way it is.

    From the very beginning, HostCharge gave off a vibe that spelled 'catestrophic future failure' to me.

    Paysystems and 2co are really in a different league than HostCharge, I think. They are proven and reliable entities, with real staff, run by adults.

  10. #10
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    We still use 2CO and paysystems more than the real MA we have and we think we would continue to do the same for some time...fraud screening and trouble free processing is sometimes worth the extra $$$...depends on business you are into..for bigger payments we use wire transfer / checks anyway.
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  11. #11
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    Originally posted by Andrew


    From the very beginning, HostCharge gave off a vibe that spelled 'catestrophic future failure' to me.

    Ditto. I'm surprised at the number of people used HostCharge considering that with a little digging, Ashar's (or whatever his name was) history was fairly easy to determine.

    You could argue that even with a merchant account there is a risk - they could hold funds for a number of reasons and not settle them into your business bank account. We're going with a merchant account with one of the mainstream banks to minimise this risk, but it still is possible.
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  12. #12
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    Originally posted by Str
    We still use 2CO and paysystems more than the real MA we have and we think we would continue to do the same for some time...fraud screening and trouble free processing is sometimes worth the extra $$$...depends on business you are into..for bigger payments we use wire transfer / checks anyway.
    You can get this through merchant accounts too - and it's definately not worth several thousand dollars a month, which is what we'll save when we migrate to our own merchant facility.
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  13. #13
    We've been with WorldPay for 4 years odd and see absolutely no reason to change.

    We initially signed up with them as we were a new company and couldn't have got a merchant account through our bank, however they've been so reliable and served us so well we're more than willing to pay the extra 1% per transaction that the difference is to leave it in their capable hands.

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  14. #14
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    Originally posted by Andrew
    That's more often something that's brought up by other hosts in an attempt to slag competitors. Otherwise, the people that spew that stuff are the kind of folks who just love to get misinformed ideas. You'll be chasing your tail in circles trying to please those people.
    I disagree but since I would be considered a competing host, I guess my opinion is invalid? The fact is that companies with real merchant accounts go through at least a minimal background check whereas companies using these 3pp don't get ANY check done.

    Two reasons why I won't purchase from sites that use 3pp exclusively: 1) Trust -- because of the non-background check and the fact that I know ANYONE can sign-up, usually for free, to accept payments through a 3pp and usually within hours. 2) I have personally had bad experiences with one big 3pp to the point where I won't use any.

    Yes, I work in the payment industry, but my reasoning has nothing to do with promoting my wares and I don't think I am spewing misinformed ideas.

    Originally posted by invectis
    ... we're more than willing to pay the extra 1% per transaction that the difference is to leave it in their capable hands.
    The last pricing I saw for WorldPay started at 5% and went up from there. In the US, the average discount rate is in the 2.3 to 2.9% range -- that's a 2.1 to 2.7% difference. Are you sure you are only paying 1% more than you should be? Maybe WorldPay pricing is more inline with European pricing???
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  15. #15
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    Originally posted by shift4sms
    The last pricing I saw for WorldPay started at 5% and went up from there. In the US, the average discount rate is in the 2.3 to 2.9% range -- that's a 2.1 to 2.7% difference. Are you sure you are only paying 1% more than you should be? Maybe WorldPay pricing is more inline with European pricing???
    I'm not sure on European banking rates, but UK rates accross the board - and especially with merchant accounts, are much much lower than the US.
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  16. #16
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    The list goes on and on. UnitedHosting uses Paysystems as well.
    Funny you should say that....

    We just got our own merchant facility through our business bank.

    - Hostcharge lost us a few $k's
    - Paysystems are s**t.

    Best thing we ever did was do it ourselves through our bank
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  17. #17
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    Who'd you go with Matt? We're playing a few banks off against each other, to see who can offer the best < 2% rate
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  18. #18
    Originally posted by voxtreme-matt
    I'm not sure on European banking rates, but UK rates accross the board - and especially with merchant accounts, are much much lower than the US.
    Even after the currency conversion?

  19. #19
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    Originally posted by voxtreme-matt
    I'm not sure on European banking rates, but UK rates accross the board - and especially with merchant accounts, are much much lower than the US.
    Interesting. With all the posts from different countries and my experience dealing with other countries as a gateway, I always thought that US credit card fees were some of the, or the lowest...

  20. #20
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    Originally posted by Watcher_TVI
    Even after the currency conversion?
    Doesn't affect us - we have a USD bank account with a UK bank.
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  21. #21
    So you get better than a 2.25% rate on USD in the UK?

  22. #22
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    When we started out we used 2checkout and PayPal. Now we are using 2checkout, PaySystems & PayPal. The reason for not getting a merchant account, is to switch clients over is just to time consuming, and what we're using is working for us, so why change.

    We wouldn't have started using PaySystems except we use ClientExec for billing management and it doesn't support recurring billing with 2checkout, but it does with PaySystems.

    I would rather not have to deal with having clients Credit Card information, and let someone else handle it.
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  23. #23
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    Originally posted by voxtreme-matt
    Who'd you go with Matt? We're playing a few banks off against each other, to see who can offer the best < 2% rate
    HSBC
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  24. #24
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    Originally posted by UH-Matt
    HSBC
    Yup, I have a little more faith in the larger banks like HSBC, RBOS, HBOS etc. purely because they are based in the UK and are registered financial institutions as oppose to the likes of PaySystems, 2Checkout etc. who are just card processing companies.
    Originally posted by voxtreme-matt
    ...We're playing a few banks off against each other, to see who can offer the best < 2% rate
    On a generalised note, you will find if you have high enough volumes you will be able to negotiate with most of the providers to push the % rate down a fair bit. Even PaySystems.
    Originally posted by voxtreme-matt
    Doesn't affect us - we have a USD bank account with a UK bank.
    Yeah, that's the same as what we do. I am just waiting for the dollar to improve before I move a bunch of funds over from our USD to GBP account though. If you play the exchange rates right, you can actually generate a reasonable amount of money from that alone.
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  25. #25
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    Originally posted by Watcher_TVI
    So you get better than a 2.25% rate on USD in the UK?
    Yes. I can't state exactly what we'll be getting but it's between 1.5 - 2% and it's closer to the 1.5% of the scale.

    We're also in discussion with HSBC to see what they can do for us.

    We find the benefit of a USD and a GBP account, like Rochen, is you can move money between the two as it suits. We can write checks drawn from either account, make wire / tt transfers, etc.
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