This entry was posted on Friday, January 4th, 2008 at 1:35 am and is filed under Making Money Online. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
If you have ever dealt with getting an online merchant account in order to process credit cards directly, you know what a harrowing experience that can be. If you are looking at options for processing credit cards, perhaps you should save yourself a LOT of headache and read this article.
First, let me highlight the options available as of this post and then I’ll cover the pros and cons of each one.
- Paypal (Visit Site) – built in credit card acceptance (business accounts)
- Paypal Pro (Visit Site) – seamless online credit card processing
- Clickbank (Visit Site) – affiliate marketplace; processes orders for you
- 2checkout (Visit Site) – marketplace that processes on your behalf
- Merchant Account – numerous “real” merchant account providers
Paypal (Visit Site)
Let’s start with Paypal since it’s first on the list and then we’ll make our way down. Paypal is the Internet’s basic payment processor. It has been around for so long that I cannot remember a time without Paypal. Well, actually I can but it was a really, really long time ago. Haha. Anyway, paypal is not without its flaws, but in general, it is a good system. For merchants, it allows you to accept payments and subscriptions and also offers to accept credit cards. However, not all credit cards are accepted and you’ll find that a good many people will not be able to buy from you using their credit card with Paypal. Also note that your customer must go to Paypal’s website in order to pay (i.e. cannot pay directly on your site).
Note: Please check Paypal’s policy on accepting credit cards -as it may have been updated since the date of this posting.
Paypal Payments Pro (Visit Site)
Next, we’ll cover Paypal’s newer “Payments Pro” solution. In actuality, this service has been around for years. However, it has taken until recently to get it to a point that it actually works and can be used. I’m not sure what Paypal did over there with all of their software engineers for so long. I guess they took a few …umm…years… off.
Anyway, this system looks pretty good but I haven’t tried it personally. It touts itself as an actual processor whereby you can have someone on YOUR site buy something on YOUR site and have the payment processed seamlessly by Paypal in the background. This would indicate they finally have a fully stocked online merchant account offering. If I had known this just a few months ago, I would’ve given it a try. Unfortunately, I went with Authorize.net –HUGE mistake (more on that later).
Note: Please check Paypal’s policy on accepting credit cards -as it may have been updated since the date of this posting.
Clickbank (Visit Site)
Clickbank is a huge marketplace of products that is built around the affiliate model. In recent years, they have begun offering the service of processing payments for vendors -even if the vendors do not use the affiliate portion of their marketplace. This could be a BIG thing for some of you, but I haven’t tried this one either and I hear they are quite picky about who they approve and which products/services are acceptable.
2checkout (Visit Site)
This company is a virtual marketplace that processes payments on behalf of its members. This is an unusual setup, and I cannot fathom how they talked their processing bank into processing their payments for them, but I imagine that they might even “be” their own clearing bank.
At any rate, this is a great service that I have used for many years. They are somewhat picky about who they will accept -based on the vendor’s product, service and website. However, if they will accept payments on your behalf, this is a quick and easy way to process most credit cards easily and relatively inexpensively. There is a $49.95 setup fee that will be refunded, if you do not meet their criteria. The drawbacks to using 2checkout.com is that they mandate that you place some wording on your payment page to the effect of “a Product of 2checkout.com” or something like that, not all credit cards will process for whatever reason, and there is no truly seamless integration (i.e. your customers pay on the 2co website). However, it’s good for a quick-and-dirty solution -especially if you don’t want monthly fees!
Merchant Accounts
I have had nothing but headaches over the past ten years when dealing with online merchant accounts. First of all, back in 1999, it took days and days of research and calling just to find out WHO all I needed to sign up with in order to process credit cards seamlessly on my website. It was a real test of my patience.
Unfortunately, things do not seem to have improved much over the years. As a test, I signed up with Authorize.net –supposedly the world’s largest online merchant account provider. Although, I cannot imagine they have any customers after seeing how they run their business and treat their customers.
First of all, there is still no one-stop solution. You still need a few different pieces of the puzzle to process payments online directly through an online merchant account processor. You need the “payment gateway” (i.e. Authorize.net), a “payment processor” (i.e. a special kind of bank), and a separate bank account of your own to be used for deposits to you and monthly payments to the various companies involved.
When signing up with Authorize.net, we were told some basic pricing and a $99 setup fee. Although a bit steep, we wanted to go with a solution that was streamlined and easy to set up. Boy did we miss the boat on that one!
It turned out that Authorize.net still outsources their “payment processing” to various banks and then tries to get you approved through various 3rd party processing vendors. I imagine that they still do it this way to create a bidding war for your business. So, they sell you off to the highest bidder and end up making it a cacophony of a process to get approved.
What is worse is that they take their “fee” up-front regardless of how long it takes to get your account up-and-running. In their policy when you join, this is stated somewhere, but I never saw it. I was told that once you log in, the clock is ticking. So, if you go with a merchant account, I suggest NOT configuring it until you have been completely approved.
In my case, it took more than two months and a lot of time, effort, and money to get going. I really had to work hard to make it happen and I spent a lot in the process –not to mention paying the setup fee and two months of service during a time when I had no service. Upon my complaint, I was given excuse after excuse and, in the end, was only given credit for one month of service.
Once I got going, things weren’t too bad. However, after five months of paying for service, I haven’t once needed them to process a payment. So, it looks like I wasted nearly $200 and more than a solid week of my time for nothing. In the end, I am now canceling my Authorize.net account –which, of course, is also not a simple thing to do.
The moral is, of course, Buyer Beware!
January 4th, 2008 at 3:20 am
[...] post by SE Conspiracy This entry is filed under Credit card. You can follow any responses to this entry through the [...]