5 Year Merchant Account Veteran Spills The Beans To Reveal How You're Virtually Guaranteed To Be Able To Accept Credit Cards At Your Website In The Next 24 Hours....

You need three things to accept credit cards online - a merchant account which will actually allow you to charge the credit cards, an order form so your customers can place orders and a payment gateway which links the two together and ensures they work together smoothly.

Typically you'll have access to all three from each processor, plus full instructions on how to set them up so don't fret too much about this.

The best providers even have full-time email and telephone technical support incase you need any advice in setting up your ordering system.

Your customers enter their orders in the order form, their card is charged, and their order is confirmed.

If they have ordered a digital product like an ebook or some software they're going to download over the Internet, you can provide instant access to the product. Otherwise, your shopping cart software will let you know you have made a sale and provide you with your customer's order details so you can send them out their order.

That money debited from your customers credit card is then sent to you (depending on the merchant account provider you use) either by check or by direct deposit into your bank account, anywhere between 24 hours and 30 days later.

This "lag phase" between charging the customer and receiving the funds yourself is known as the "settlement time" and varies from provider to provider though it clearly makes sense to keep this figure as low as possible to keep cashflow running smoothly in your business and also means you need less capital to begin with as you can quickly reinvest your profits in more stock, advertising and so on.

Sometimes a percentage of your turnover is kept back by the merchant account provider as "insurance" incase they get a sudden attack of refunds or chargebacks.

It's rather like taking a deposit when someone rents a house. The landlord then knows he or she has got some cash put aside just incase, and if you live up to your end of the bargain you get the money back later.

This money is known as a "reserve" fund.

Generally a provider will either take no reserve at all or will hold back around 10% of your turnover for around 6 months, on a rolling basis.

This is best avoided if you can manage it as it cuts into your turnover, meaning you've got less money to reinvest in your business, but sometimes it is a necessary evil of doing business online.

Indeed, in my constant search for the best merchant account providers I still maintain some accounts that require a reserve fund and have never had this money held back as I follow the rules closely.

When your customer's card is charged a per-transaction fee will be charged which again varies from provider to provider from around 2.5% up to 20%. So if you sell a $100 product, for example, the provider will deduct say 5% from that sale and you'll receive payment of $95 at the end of the settlement time.

Again, keeping these fees as low as possible means you make more profit and so you can build your business quicker.

One proviso here though - different providers offer different services such as including affiliate software, shopping carts and virtual terminals into the bargain so depending on your circumstances paying slightly higher fees may make sense if it means in the long term you'll save money by not having to buy your own shopping cart software etc.

Some providers also charge additional fees such as monthly and annual fees, though those that do typically offer far lower per-transaction fees and so despite what logic would predict actually work out cheaper for you.

Here is an example of two providers' charges correct at the time of writing:

Provider 1:

Per-transaction fee: $1 per sale plus 7.5% of the transaction
Monthly fee: No monthly fees

Provider 2:

Per-transaction fee: $0.25 per sale plus 2.5% of the transaction
Monthly fee: $29.99

Let's say for the sake of argument you sell just one product a day for $30.

Let's see your turnover at the end of a month:

After fees, you'd get $26.82 per sale with Provider 1 which would work out at $804.75 per month.

With Provider 2 you'd get $29 per sale, and you'd pay $29.99 in monthly fees so at the end of the month you'd have made $840.01

So you'd have made an extra $35.26 in a month. Or $423.12 over the course of a year. And that's only with tiny figures. Selling more products, or raising your prices would increase the differences even more.

What could you do with an extra $423 a year, simply because you chose one processor over another?!

(And yes, I'll tell you more about these providers in a little while).