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you already know how expensive it can be. Application fees,
setup fees, standard monthly fees, transaction fees... they
all add up fast! It can be too much for a business that's
just getting started.
There is an alternative. Third-party credit card processing
companies handle your credit card transactions for you in
return for a cut of your profits. Setup is typically
either free, or there's a small, one-time fee.
Here's here it works: once you've applied and/or been
approved and paid any applicable setup fees, you create
ordering links for your products. These ordering links
lead to the third-party processor's server, where they
handle orders on your behalf. Credit cards and online
checks are common ordering options provided by third-party
processors. Some also offer a telephone ordering option.
After your customer places an order, that sale is
automatically credited to you, minus the company's
commission. You are paid by the third-party processor
at regular intervals, according to their pay schedule.
So what's the big deal? Why would third-party processors
appeal to startup businesses? Aside from the setup fee,
you are only ever charged IF and WHEN you make a sale.
If you don't sell anything, you're not charged anything.
Here are a few things to consider when researching third-
party processors:
* How much is the setup fee? Don't be put off if there
is one; three of the four processors I use charge a
setup fee, and they've been well worth the small cost.
* Transaction fees. After paying these fees, do you
still make a reasonable profit? I've seen fees
ranging from around 5% to about 30%, with the average
somewhere in the middle.
* Are there additional fees for accepting online checks
or telephone orders? Does the processor even offer
these as options?
* Settlement fees. Does the company charge to cut you
a check each pay period, or to wire
transfer your funds
to you?
* How much is the reserve? A 'reserve' is the amount held
back from each pay check as a "slush fund" against future
refunds, returns, or chargebacks. What percentage do they
hold as a reserve, and for how long? It's commonly 10%,
10%, held for 6 months before being released back to you.
* Pay frequency. Most pay either every two weeks, or
once a month.
* Reliability. Talk to others who have used the service
to see if they've had any problems. If your order
processor is 'down', your customers can't buy!
* Restrictions and limitations. For example, is there a
minimum monthly sales quota you must reach? Is there a
maximum product price you can set? Does the company
restrict what the type of content you can sell? Do
they handle only tangible or intangible products?
* Customer service. Does the company respond promptly
and helpfully when you contact them?
* 'Extras'. For example, are there reporting or tracking
capabilities? Free use of a shopping cart?
Finally, here's a short reference list of several third-
party processing companies:
* Clickbank, http://clickbank.com/
* GloBill, http://globill.com/
* Digibuy, http://digibuy.com/
* Revecom, http://revecom.com/
* iBill, http://ibill.com/
* 2Checkout.com, http://2checkout.com/
* Verotel, http://verotel.com/
* CCNow, http://ccnow.com/
As you can see, there are many options, so don't let a
tight budget prevent you from taking orders online! Third-
party processors are both convenient and affordable -- even
for startup businesses.
About the Author
______
Angela is the editor of Online Business Basics, a practical,
down-to-earth guide to building an Internet business on a
beginner's budget. If you enjoyed this article, you'll love
the book! Visit http://onlinebusinessbasics.com/article.html
or request a series of 10 free reports to get you started:
mailto:businessbasics@workyourleads.com
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