Merchant Accounts

Are you ready for e-commerce? You have a good product, an interactive order form, and a fulfillment process. But you also need a merchant account so that you can accept credit card orders.

If you approach your local bank and mention selling products on the Internet, you are apt to find that your bank has no interest in helping you to get a merchant account. In fact, a poll of five banks displaying at a recent small business exposition found that none of those banks aiming at small business were willing to discuss merchant accounts for small online businesses.

Where to go? There are many online merchant account offers. Most are offered by resellers, people who receive a commission for every new merchant account they refer. Of course, those accounts cost you, the merchant, more than an account you establish directly with the bank.

As a Web Designer and Information Architect, I often deal with clients who are new to online retail. To help clients understand their merchant acount options, I have been gathering merchant account offers during the last three years. The least expensive merchant account I have found is with Nova Bank through Costco. Yes, Costco!

First you become a Costco Executive Member for $100 per year. As an Executive Member, you are entitled to apply for the low cost merchant acount from Nova. Nova is open to e-commerce. In fact, Nova makes it relatively easy to set up a CyberCash connection.

What are the costs for an e-commerce-ready merchant account from Nova?

$25 application fee.

$20 monthly minumum fee.

Additional charges depend on the method you use to process the credit card numbers that come to you when people order your products.

Manual Processing

Manual processing is the lowest cost option for e-commerce and it's a good choice for a new business. When you manually process the transactions, Nova receives 2.04% plus $.28 per transaction. To manually process an order, you need a $225 credit card machine or $180 PC software to be used in processing the orders online.

Automatic Processing

Automatic processing is the only sensible solution for high-volume businesses. When you use the CyberCash automatic credit card processing service, the credit card numbers are validated online while the purchaser waits. When an individual makes an online purchase, the credit card number is processed automatically, the purchase is validated for that card, the purchaser receives notice of the purchase approval, and the seller receives the order. This procedure involves CyberCash fees of $109 for setup and $14 per month. The Nova fees are 2.22% and $.33 per transaction.

There are many merchant card processing banks offering varying services. Before you sign up with any bank, just take a minute to compare their services and fees to the services and fees charged by the Costco Executive Member Merchant Services from Nova. Be sure that you aren't paying higher than necessary fees.

~ Virginia Lawrence, Ph.D. is an Information Architect who publishes both in print and online. Contact her at virginia@cognitext.com.