Merchant services query

[Teri]

Hi
We're just starting out in business selling online and need some advice. We have a website and plan to sell CDs but are getting a bit confused about how to set up. We have a Paypal account and bank business account, and know how to put a Paypal button on the website, but do we need merchant services? Is that provided by paypal? we're actually a bit confused as to what 'merchant services' are.
Any help would be much appreciated,
Thanks

 

[Ross Knight]

Paypal offers merchant services such as credit card processing but forcing users to complete orders via PayPal is not always conducive to a 'professional appearance'. Should you wish to process credit cards directly via your site you will need your own merchant account and appropriate payment gateway (i.e. SagePay, WorldPay, etc.).

 

[ApprovedIndex101]

Hi Teri,

As Ross says you can get merchant services through PayPal and it's a payment gateway with a good reputation that's trusted by most online shoppers.

With PayPal though you are paying a high fee per transaction regardless of what type of card is being used. A merchant bank account with a company like Streamline or Handepay on the other hand will charge different rates for transactions via debit cards and credit cards and the transactional fees will be cheaper than PayPal.

However, you will often have to pay a monthly fee for a merchant bank account and for a payment gateway on the website. It therefore depends heavily on your anticipated volume of sales - the more sales you make, the more cost effective a merchant account will be as compared with PayPal.

Visit this site www(dot)approvedindex(dot)co(dot)uk/merchantaccounts/ for a free, independent Buyer's Guide and a free service for comparing quotes from up to 4 UK merchant account companies.

Approved Index is a quote comparison service for UK B2B buyers and a part of Reed Business Information.

I hope this has been helpful.

 

[PayPoint net]

Hi Teri

PayPal is great when starting out or if you are forecasting a smaller volume of transactions. Once your volumes grow, a merchant account is advisable as you can negotiate a cheaper per transaction charge (more cost effective) and you get a lot more control & functionality. As the merchant account provider will underwrite your account they have a thorough understanding of your business and you will be able to service your customers a lot quicker with regards to refunds etc.

We have put together a few articles explaining merchant accounts - which may help you with your research.

Siobhan

 

[Unicepeebles]

Another key point to remember is that all merchant acquiring banks have tightened up their risk departments. If you do a large volume of transactions in a small period of time, you may find that any transaction provider may simply withhold your money (sometimes amounting to 10's of thousands of pounds) for up to 180 days if they feel the volume of transactions is too high or too much of a risk. It pays to have other methods of payment available as I have seen many a business collapse at the whim of a pencil pusher in a risk department without any thought for the business owner. Build up your transaction rate slowly and always be prepared to offer other methods of payment. In this day and age, many people can transfer money straight in to your account (if you provide the acct. no. and sort code) using their own internet banking so do not feel tied down to using a 3rd party to bring in your revenue. Also, if you are with a particular bank, it is advisable to use their in-house card or merchant facilities as they will be at less of a risk, and less likely to stop your account without warning!!

Hope this helps, I am quite au fait with merchant services so if you need any pointers, send me a message.

 

[CharityClear]

Hi Teri,

As has been covered by other members, Paypal is good for starting out and gauging how many transactions you are processing. Longer term it may work out more cost effective to use a payment gateway/merchant account combination to process online payments.

You could speak to your business account provider about getting a merchant account set up or speak to a payment gateway provider, like ourselves, who will also be able to assist you with an application for a merchant account.

Marc.