[thelist] Merchant account

[Keith]

Tamara's post on this subject was right on target. 2.9+.30 can be 
more than reasonable for a smaller business by the time you 
amortize all the other charges that can come with a merchant 
account. She left out two important gotchas that are particular to 
web accounts.

1) You're going to have to process the transaction, either live-time 
or offline. Live-time processing is a hefty expense on top of the 
merchant account expenses. If your client is selling shippable 
product, live-time processing doesn't really make as much sense 
as offline processing. But offline processing requires access to 
some offline software that can run from $300 to $900. 

2) You need to look out for the minimum months contract. Most 
merchant accounts sold online are not sold by a bank or an ISO but 
by someone who is simply reselling for an ISO. These accounts 
frequently contain a 12 to 48 month fee contract. Statistically your 
client will probably bail out of business when he/she has to renew 
next year's SSL certificate. Well, that doesn't concern the shark who 
sold them the account, they're still going to have to pay those 
monthly fees. If the account seller you're looking at has a minimum 
months contract in the fine print, move on, there are others who 
don't. It's not pleasant to contemplate an exit strategy during a 
startup, but it is wise.

Add it all up, something like PayPal can be a good way to find out if 
the site's product, approach, and traffic will justify the expense of 
using a system designed for heavy duty sales.

keith