Recently, I went looking for an Internet Merchant Account. My mission was two-fold:

1. Open an account for myself and

2. Research options for my new ecommerce information site Take-Payments-Online.com.

After some research, I thought I'd found an attractive Merchant Account offered through a reputable reseller. As it turns out, I learned the hard way that I was wrong.

Fortunately, my experience can help you avoid the same trap. Based on my own experience, I developed a list of questions to ask a potential merchant account provider. Understanding the answers to these questions before signing an application or agreement will help make for a solid partnership between you and your account provider.

But first, the story:

My Internet Merchant Account Experience

I found what looked to be a competitive Merchant Account offered through a program at a popular reseller. Fees were summarized on the reseller's site and applying was simple. I paid an $89 set-up fee, which took me to an online application I was required to submit to get the process going.

That's when things got interesting. Submitting an application meant agreeing to a previously undisclosed 45 page merchant agreement. An unmentioned termination fee was buried on page 11.

If I ever cancelled the account, I'd be hit with a $295 termination fee. I knew from my research that the large termination fee was not competitive with other merchant accounts and other aspects of the account were not attractive enough to compensate.

Suddenly, this merchant account was not such a good deal.

More critically, however, the termination fee was not disclosed before I was required to pay for set-up. I immediately asked for a refund.

Non-Refundable

Then things got even more interesting. I was told the $89 fee was non-refundable. I'd seen a footnote that the fee was non-refundable, but interpreted it to mean only if they actually did some work and processed an application. I had not completed an application and did not intend to after learning of the extra $295.

Using the email support system so I would have documented proof if I needed it, I insisted on a refund. Still no go.

When I explained there had been no set-up to justify a 'set-up' fee, they responded that the fee was really an 'application' fee - non-refundable, as explained in the footnote on the order page.

Basically, they were telling me I'd paid $89 for a link to an online application, which I had not and did not intend to submit.

Finally, A Refund

I explained I would not take no for an answer. If we couldn't work this out I'd report them to the Better Business Bureau for undisclosed fees, file a complaint with my credit card company, and copy the company president on each. My complaint was sent to the next level.

Finally, after an additional three day wait, the refund was approved.

Avoid An Internet Merchant Account Trap

I made the mistake of taking information at face value and relying on the reseller's good reputation in other areas.

To avoid unpleasant surprises such as mine, insist on all information and agreements up front, before committing to the account or paying initial fees.

Having all of the documentation may not be enough. Be sure you understand all aspects of your Internet Merchant Account agreement as well as fees and equipment required.

If you find incomplete, unclear, or conflicting information, ask questions.

If your sales representative is more interested in getting your signature than helping you understand your commitments, ask for another representative or go elsewhere. There are many, many Internet merchant account options available. You need not be trapped into one that is uncomfortable for you.

Based on my own experience, I developed a list of seven multi-part questions to ask a potential merchant account provider. Before contacting a provider about fees and agreement details, you may also want to familiarize yourself with all of the potential fees associated with an Internet Merchant Account. There is a list here, about half way down the page: http://www.take-payments-online.com/InternetMerchantAccount.html

7 Questions to Ask

Understanding the answers to these questions before signing an application or agreement will help make for a solid partnership between you and your account provider:

1. Can I accept credit cards both online and offline?

Do I need to get separate authorizations or permissions when setting up my account for different types of transaction (Internet, retail, phone orders, etc.)?

What other additional fees are involved if I accept both online and offline credit card charges?

2. Can I accept online payments using methods other than Mastercard and Visa (Discover, American Express, Diner's Club, online checks, debit cards, etc.)?

If so, what are the fees and do I need to do anything to "activate" those payment methods?

3. What are the different discount rates and fees for different types of charges (Internet, in person, telephone, mail, etc.)?

4. What are the other fees related to this account - yearly, set-up, application, monthly minimum, statement, support, cancellation, discount, per-transaction, gateway access fees, card reject fee?

Are these subject to change?

Are there any other fees?

5. Do I process charges manually or automatically?

If manually, is it possible to get automatic processing?

If so, do you provide a secure online payment gateway?

How do I do it and what extra charges will I pay?

6. What other software and services do I need to become fully ecommerce enabled online (such as secure gateway provider, etc.)?

Do you have a list of compatible or preferred providers?

7. Do I need additional hardware or software?

If so, what is the cost and how do I get it?

Ask these questions and establishing a mutually comfortable relationship with your Internet Merchant Account provider from the start. It will help you avoid "traps" and lay the groundwork for a long, solid partnership.

Bobette Kyle draws upon 10+ years of Marketing/Executive experience, Marketing MBA, and online marketing research in her writing. Her book, "How Much for Just the Spider? Strategic Web Site Marketing for Small-Budget Businesses", shows how to better find, target, and attract Web customers. Read about it at WebSiteMarketingPlan.com - http://WebSiteMarketingPlan.com.

Copyright 2003 Bobette Kyle. All rights reserved.

A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Merchant Accounts... 1st Steps To A Merchant Account It's a fact that traders who are in a position to accept credit cards from their customers can expect to make more sales than those who only accept cash transactions. According to "Jumping Through the Merchant Account Hoops" by Khera Communications, the average credit card transaction is $40, compared to just $9 for cash sales. So, by not accepting credit cards you put yourself at a huge business disadvantage compared to your competition. It may also surprise you to learn that credit card transactions can cost your business less in transaction charges. A case study by Coopers & Lybrand found that it costs, on average, 2.7% to process a credit card transaction as compared to 4.8% for cash and 4.0% for checks. The reason for this perhaps surprising statistic is that cash and cheques require more handling by financial institution staff whereas credit cards tend to be processed electronically for the most part these days. To offer a credit card payment facility to your...

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