E-payment

[JW]

Considering a payment system, similar to the Kagi used by Futurequest.

Any comments, or suggestions appreciated? I'm a total newbie in this area.

Thanks.

JW.

[Rich]

Services such as Kagi (ibill.com is another) are actually classified as resellers since they essentially resell your product or service for a fee. They conduct the direct financial transaction with the customer.

Pros: relatively easy to setup, low start-up costs
Cons: Higher per-transaction rates compared with having your own merchant account, does not lend the same professional image as an integrated merchant account with a payment gateway, longer delays in getting paid, limited control over chargebacks/credits, etc.

I recommend most businesses get a merchant account as soon as possible.

Pros: relatively easy to setup, lower per-transaction fees, projects a professional image and an image of financial stability, credits issued to your checking account in 2-3 days

Cons: Higher start-up costs, cost-effective only for US merchants

<edit>The UK has made great strides in e-commerce lately, and UK merchants may now find it much easier and cost-effective to get a merchant account setup.
</edit>

You can find more e-commerce information at www.aota.net.

Rich

[This message has been edited by Rich (edited 10-31-00@10:03 pm)]

[BOF]

I considered a number of payment gateways when setting up shop.  Since I'm starting out very small, and am based in Hong Kong, I rejected the idea of a merchant account.  That actually left me with very few options, and I narrowed the choice down to CCnow and MultiCards. (I considered Kagi but when I received no reply to emails repeatedly sent I decided this was a sign!)  CCnow looks good, but I didn't particularly like their shopping cart system.

Eventually I went for MultiCards.  Set up costs only $15 (if you don't want real time checking) and their support seems good, if a little slow.  I combined this with ShopFactory (which has support for MultiCards built in) and so far I'm very satisfied.

Hope this is useful.  Get in touch if I can help further.


------------------
Chris
Hong Kong
www.plainwebdesign.com
www.simplyaromatics.com

[Dan Kaplan]

One thing I'm curious about, and Rich is probably as well qualified as anyone to answer this, is the cost of merchant options relative to the overall quality.  With such a wide range of start up costs -- virtually free up to $1,000 or so -- is it a case of getting what you pay for or are the big ones simply charging that much because they can?  Obviously, transaction fees, monthly fees, and processing options can account for a good chunk of the difference, but is some of the pricing simply the assurance that you're dealing with reputable and stable sources?

Databank

[Rich]

re: How much should I pay for a high-quality merchant account?

The &quot;bottom line&quot; answer is that for a typical, low-risk business, you should expect to pay between $500 and $1500 to setup a merchant account. Remember, however, that this is a one-time fee (for low-risk accounts) and that you will be using the merchant account for several years.

The most important factor you should consider in determining whether or not you are getting &quot;your money's worth&quot; is the customer service and support offered by the acquiring bank. Here are some questions to ask:

(1) Does the bank offer 24x7 merchant phone support?

(2) What is the typical time for them to respond? Do they answer immediately, or call you back?

(3) Do they have a risk department to help monitor transactions for fraud and assist you when you are the victim of fraudulent transactions?

I cannot stress enough how important it is to have a good, solid relationship with your merchant account provider and the acquiring bank.

If your business is only earning about $50 per month and it is still a hobby, then this is not that important, perhaps.

But, as soon as your business starts to generate a revenue stream that you do not want (or cannot) live without, you should make sure that you have the banking relationship you need to make sure that your cash flow is not interrupted.

Remember, if you operate an Internet business, your merchant account is the lifeblood of your business. You cannot exist without it! I have seen some businesses brought to their knees and almost put out of business because some problem arose with their merchant account and they could not get in contact with the bank or the bank was slow to respond, etc., etc.

Rich

[JW]

Thanks for the input.

My planned transactions are going to be numerous, but small, mostly around $10US. I've looked at a number of the service charges of the banking services, and find that they are not entirely clear. I feel like I am reading a document for signing a car lease - just knowing I am going to get screwed, but not exactly sure how it's going to happen.

Since this is a trial, I am leaning towards NOT creating a merchant account. Reputation of the banking service will be important. Obviously Futurequest has stuck with Kagi for a while, so that is a plus.

Regarding certificates, any comments on the necessity with a banking service, or the various companies (Thawte, Verisign, etc) to go on that route?

JW.

[Rich]

Fees/prices:
Your transaction fees will &quot;eat&quot; a considerable amount of a $10 transaction. The general guideline for Internet sales is to establish a product/service in the $20-$25 range as a minimum. Sometimes you can do this by grouping items, increasing the minimum quantity, etc.

Certificates:
If you are going to use a third-party processor/reseller to collect the payment then you will not need a certificate. You only need a cert if YOU will be collecting confidential information using a script located on YOUR server.

Rich

[JW]

When a customer payment is processed, how are you as the account holder with the online service like Kagi notified of the transaction. How is the notification made, and how quickly if the ccard processing is successful to release an order? If you were using the account for memberships online, how can the customer account be activated immediately?  Sorry to be so dense, I am totally unfamiliar with the process.

JW.

[John Kennett]

I'm using a company called Verza www.verza.com to handle credit card payments on a couple of my sites.

I chose them because at the moment I am not prepared to spend out to set up merchant accounts where the volume may be very low -- if it takes off, then I'll look at other solutions.

Verza has no set up charge, and their fees are $1 plus around 5% of each transaction. Given that they provide a full service (secure payment gateway, merchant facilities and even a basic shopping cart) I reckon this is a good deal. Obviously on $10 purchases it's going to take out a big chunk of your money, but that's the way it is with small transactions!

Another bonus for me, being in the UK, as they are not restricted to the US (like PayPal for instance).

John

[Jeff]

Hmmmm...

www.verza.com is _very_ slow right now for me.  After 3 minutes, the homepage has still not finished loading.