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  1. #1

    * Merchant Account

    Good day to you all.

    We came into business 5 months back and am not sure if we have a credit rating at all.

    Our typical price for the shareware keys that we sell is around 10-15$ per copy. We tried Paypal in the beginning when we were small and now, we want to avoid asking users to register with paypal or show the register here screen.

    What we are looking is for a merchant account or some *inexpensive* way to make a safe transaction.

    I called up the PaySystems and they offered me 5.5%+35c which comes to 9% if the shareware copy is 10$.

    Somebody advised to go with esellerate as they charge 10% flat rate but I was interested in cutting down the costs where possible. 10% of what I earn living in US is abominable where the shareware costs only 10$ .

    My question to you all experienced folks is,

    1) Should I look for merchant account now or wait for another six months? I think we will make more than 1000$ per month in transactions after 1-2 months.
    2) What rates can I expect?
    3) I don't have a shopping cart
    4) I totally get lost when ppl talk about credit chargebacks etc.
    5) happens to be more trusted gateway. What is the approximate monthly charges associated.

    Thanks and I look forward to hearing from you.

  2. #2
    Join Date
    Sep 2001
    Seattle, WA
    The problem with selling a $10 item is the ~30 cents per transaction are going to cause your effective percentage to be rather high.

    First, PayPal no longer requires registration. Someone can pay with their credit card and then it optionally lets them save the information into a new paypal account if they wish. This is a plus.

    Another option is a 3rd party processor like PaySystems or 2Checkout. The problem here is they tend to charge higher per-item and discount fees, as you've noted.

    Then there are "real" merchant accounts. The problem with them is you'll pay typically at least $20 in monthly fees on top of around 30-35 cents per transaction and around 2.2%.

    So it comes down to you should get a real merchant account when the difference between that 2.2% and the 5.5% paysystems or 2checkout charges makes up for the fact you pay $20 a month in monthly fees.
    Jim Reardon - jim/

  3. #3
    Thanks Jim for your quick response. I thought the transaction fees were ~20-25c max.

    Can I use my own **FORM** and give the transaction details to Paypal gateway? I don't think I can do that. They always see a registration form with an option to skip.

    2Checkout looks not to be a viable option with all the complaints about them in WHT.

    Still, I am keeping my fingers crossed as what to do.

    Thanks again.

  4. #4
    Join Date
    Mar 2002
    In My Own World
    Originally posted by

    Then there are "real" merchant accounts. The problem with them is you'll pay typically at least $20 in monthly fees on top of around 30-35 cents per transaction and around 2.2%.
    Actually you will have a processor fee and a gateway fee (such as or payflow pro) so the cost would start at around $50-60 per month just to have the merchant account.

    Then you are going to have the flat percentage of 2.35% (or what ever your processor charges) and then the 30-35 cents per transaction fee that goes to your gateway.

    Tracy Phillips

  5. #5
    Join Date
    Sep 2001
    Seattle, WA
    Yeah, processor fee is typically around $10, gateway fee around $10-$15.

    I pay $10 each, 30 cents per transaction (5 cents to gateway, 25 cents to processor) and 2.15%
    Jim Reardon - jim/

  6. #6
    Join Date
    Jul 2003
    Castle Pines, CO
    Once you start to make $1,000 - consider a merchant account. Otherwise, a third party processor (like 2Co or Paysystems) might be better for you. A merchant account will costs you about $20 a month in gateway fees, statement fees, and customer service fees. You also have what is known as a monthly minimum, which is usually $15-25. If it is posted at $25, and you feel you might sell less, ask for a lower monthly minimum. (This comes from your discount rate. If you sell $1,000 a month & your disocunt rate is 2.5% - then you have met your monthly minimum.)

    If you are only selling one prodcust or just a couple, you do not need a cart. You can pass thru all the information to the gateway & then let the gateway capture the CC data. You do not need a SSL for this. If oyu want to process the CC on your website, you will need to get an SSL. is common for website merchants - a lot of people here about them ebcause it is easy to resell their services & they advertise the gateway. Most gateways are not advertised because you need a CC processor as well. There is also LinkPoint & Payflow. LinkPoint & use the First Data Platform (like Yahoo) to verify transactions. And actually First Data owns LinkPoint.

    As far as chargebacks, this usually happens when someone calls their issuing bank & tells them they do not know what this charge is, or I didn't do it. A lot of times, you might get fraudulent charges.

  7. #7
    Join Date
    Aug 2003
    Chesapeake, VA
    The problem with low ticket transactions is that the same basic processing costs apply - regardless of which company or solution you select.

    No matter who is running through the credit card - whether it is you as the merchant, on your own merchant account - or a 3rd party processor - there are the same per transaction costs from VISA/MC interchange, dues & assessments and there are network transport fees from the processing network... and then usually some form of gateway per transaction cost on top.

    So... you're always going to be looking at a cost of around 40-50 basis points on a $10 trans size. And whoever is providing it and taking the risk on the transaction needs to generate profit worth the risk so that adds a little overhead too, especially if it is a 3rd party processor.

    There are three ways you can handle this:

    1) Have customers "pre-fund" accounts similar to the way domain registrars do.

    2) Use an alternative form of payment processing that has a lower cost structure - like e-check processing. (or a combo of both, equating to an effective lower "average cost")

    3) Accept the cost structure as a "cost of doing business" and chalk it up as such. - 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 - we look forward to helping your business grow!

  8. #8
    Thank you all. I think I will accept through PayPal and will use their IPN (Immediate Payment Notification) to generate the keys on the fly.

    I appreciate all the wonderful support from everybody in WHT.

  9. #9

    I wouldn't use PayPal if I were you. They have a lot of hidden costs, you'll wind up paying for inter-country charge and currency exchange fee. The overall charge for international transaction will be higher than than 5%.
    Also bear in mind that PayPal isn't available throughout the world.

    Just my two cents.

  10. #10
    i agree your choice! is also good for international merchants, they charge me for 1.99% transaction fee. and give me a visa card to withdraw money from atm machines when somebody paid me online

  11. #11
    Thanks again. We are based in Madison, WI and we do sell 30% of shareware keys to European customers. I am still not sure what to do.

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