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Online service sale: what should I know?
Online tool - no downloads, no shipping - I'm excited but also scared....
mnemonik23




msg:3201895
 4:55 pm on Dec 28, 2006 (gmt 0)

Hi,

This is my first attempt to run online business and I'm exited but also scarred... I'm afraid to do something wrong :(

Could somebody please go trough my points and answer some questions?

Here are some details:
----------------------

1) It will be an online tool to calculate stuff (no downloads, no shipping) that customer needs to pay for.

2) There will be a registration, login, access time subscription, etc.

3) The lowest amount will be $1.95 for a 1 week of access and up to $55.95 per year.

4) I hope to earn more than $2,000 per month and will have PayPal as a processing engine (for PayPal users).

5) I'd like to open a merchant account (probably with authorize.net) for credit card processing since PayPal charges transaction fees for CC processing.

Well, that's about it. My questions and fears are:

a) Since there is no shipping, I don't need to charge the sales tax, right?

b) What will happen if customer uses stolen CC info?

c) Refund - what if customer uses my tool and then requests a refund? How do I handle it?

d) is there anything else I need to know?

I'd appreciate any comments suggestions!

 

LifeinAsia




msg:3201976
 5:53 pm on Dec 28, 2006 (gmt 0)

I'd like to open a merchant account (probably with authorize.net) for credit card processing since PayPal charges transaction fees for CC processing.

What makes you think authorize.net (or any other credit card processor) doesn't charge transaction fees? How do you think they make their money?

a) Since there is no shipping, I don't need to charge the sales tax, right?

Probably... Talk to your accountant- way too many local regulations to give an absolute answer.

b) What will happen if customer uses stolen CC info?

The real owner will probably issue a chargeback, you will be out the original money and processing fees plus a $10-20 chargeback fee.

c) Refund - what if customer uses my tool and then requests a refund? How do I handle it?

It will depend on your refund policy.

mnemonik23




msg:3201989
 6:01 pm on Dec 28, 2006 (gmt 0)

Thanks LifeinAsia!

I don't know about authorize.net but I read somewhere that LinkPoint for example does not charge thransaction fees.

I just learned that I need to have an Internet merchant bank account that also charges fees :(

Well, if all of them charge transactions fees maybe I should stick with PayPal's Website Payments Standard?

I thought that I can get away with around $40 per month, no transaction fees and maybe setup fee... This maybe looks stupid but as I mentioned before this stuff all new for me.

lorax




msg:3202753
 12:39 pm on Dec 29, 2006 (gmt 0)

Greetings.

Good Reference thread [webmasterworld.com]. Your questions indicate you have some knowledge of eCommerce which is good. The answers to some of your questions, however, are completely dependent upon other factors that we cannot provide a blanket answer to. For example:

Q: Since there is no shipping, I don't need to charge the sales tax, right?

A: It depends. Where do you live? Does your state/country charge sales tax? What is the law where you intend to conduct business?

Q: What will happen if customer uses stolen CC info?

A: While I believe most CC companies will follow similar protocol I suspect there will be differences.

mnemonik23




msg:3204753
 3:50 am on Jan 1, 2007 (gmt 0)

Thank you lorax!

I'm a little confused... Lets say I'd choose to go with merchant account. So I have to pay to CC processing company transaction fees + I alos need to pay for transaction fees for actual Internet Merchant bank account?

Please, give me some examples

jbinbpt




msg:3204768
 4:08 am on Jan 1, 2007 (gmt 0)

Have you looked at Google Checkout?

lorax




msg:3204805
 5:55 am on Jan 1, 2007 (gmt 0)

>> examples

Sorry but you'll need to do the homework yourself on this one. The fees change too often. In general, for an all in one package deal you will need to pay for the merchant account, the initial setup on the CC transaction gateway, and then some form of ongoing fee plus per transaction fee. But it's like home loans - there are many different ways to provide the solution. Too many and they change far too often. Not to mention all the small print that goes along with these contracts.

mnemonik23




msg:3204843
 8:09 am on Jan 1, 2007 (gmt 0)

I agree, I will do the homework but in general what I found out so far that both CC processing company and bank that provides you with Internet Merchant account again BOTH have transaction fees, which is rip off! Maybe it was just one bank....

At least can you provide with a few reputable companies that have it all-in-one package?

Kendel




msg:3205092
 6:38 pm on Jan 1, 2007 (gmt 0)

You're charging for your service, so why wouldn't a bank or credit card processor charge for theirs? If you are starting a business you have to accept that there is a cost associated with doing business. You will have hosting fees, bank fees, etc. Your objective will be to minimize the cost or locate the best value among the options available, however, I doubt you will be able to eliminate them (but if you do, you've got to ask 'how is that service making their money?'. Noone is in business to consistently lose money).

bunltd




msg:3205123
 7:32 pm on Jan 1, 2007 (gmt 0)

re: merchant accounts. You generally pay to have the service and you pay a per transaction fee. It's just the cost of doing business. The amount you pay varies, and it also depends on the volume of your transactions, as well as whether you're offering a product or service - they use this to determine risk. FWIW, I know we pay around $50/month plus transaction fees for Authorize.net - we do a mix of tangibles/services. You'll have to shop around for the best rate. I do have some clients who are using PayPal Pro - which is a bit less expensive.

LisaB

Peter Cornstalk




msg:3205147
 8:22 pm on Jan 1, 2007 (gmt 0)

The more card transactions you have, the less your fees are. If you have no track record of running a business or accepting credit cards, you are more likely going to pay more in the beginning for discount rates and gateway fees.

If you run enough transactions you can get interchage+ rates that are just a few points over actual interchange rates + assessments. You can usually lower your gateway fees too.

Corey Bryant




msg:3205164
 8:49 pm on Jan 1, 2007 (gmt 0)

Keep in mind that Authorizenet.com is not a merchant account provider (MAP). It is only an electronic payment gateway (like LinkPoint, Verisign's Payflow). You still need a merchant account to accept credit cards.

If you are offering some type of membership based website, you might consider extra fraud measures like LinkShield, VBV, MSC, etc.

If you are in the United States, MSC won't protect you on United States transactions, but you will at least be protected on the Visa transactions (from the 'I didn't do its mainly)

-Corey

sun818




msg:3205424
 4:21 am on Jan 2, 2007 (gmt 0)

Consider using a shopping cart that supports Paypay Website Payment Pro (and Google Checkout). The transaction costs are straightforward and your expenses are easier to calculate. You also save quite a bit on Discover & American Express charges.

I don't recommend signing up for a merchant account unless you get a recommendation from a trusted friend. Too many variables with potentially unethical sales people that will tell you anything but not deliver on paper.

solly




msg:3205435
 4:39 am on Jan 2, 2007 (gmt 0)

Just a quick reply about authorize.net....run as far and as fast as you can from them. We used to use them and one day, for no reason, they decided we weren't good enough for them and they closed our account with less than a month's notice. We had zero chargebacks and were a very good customer in all regards. Beware!

Corey Bryant




msg:3205956
 5:10 pm on Jan 2, 2007 (gmt 0)

I have never heard of an electronic payment gateway shutting you down - usually it is the merchant account provider, but I guess there isa first for everything.

What did your merchant account provider say? They should be compatible with a few other gateways.

Usually the merchant account provider will give you a merchant account almost immediately and then if you come back on the MATCH list or something else, they will shut you down

-Corey

[edited by: Corey_Bryant at 5:11 pm (utc) on Jan. 2, 2007]

solly




msg:3206620
 8:02 am on Jan 3, 2007 (gmt 0)

I have never heard of an electronic payment gateway shutting you down - usually it is the merchant account provider, but I guess there isa first for everything.

Yep, the MAP is not the only one you have to look out for.

What did your merchant account provider say? They should be compatible with a few other gateways.

They recommended we go with another gateway named USA Epay. They were cheaper and they had some better features, so, it actually worked out well.

Usually the merchant account provider will give you a merchant account almost immediately and then if you come back on the MATCH list or something else, they will shut you down

Now that's a first for me...never heard of it, but it's no surprise, as we had our account since 1999, so maybe they didn't have much of that kind of thing back then...we had no problem getting a merchant account. And, actually, we had no problems with anything payment related until authorize.net pulled their stunt...

Corey Bryant




msg:3206845
 3:02 pm on Jan 3, 2007 (gmt 0)

Now that's a first for me...never heard of it, but it's no surprise, as we had our account since 1999, so maybe they didn't have much of that kind of thing back then...we had no problem getting a merchant account. And, actually, we had no problems with anything payment related until authorize.net pulled their stunt...
Happens all the time. Providers want the account, they want the sale and they give the merchant account on a good faith basis. But then if the merchant checks the box that he is not on the MATCH list - and they find out he is - the account is suspended until the MAP finds out why the merchant is on. The merchant can be terminated since he did not complete the contract at times.

The gateways - well authorizenet.com I know does not allow / support adult businesses but the MAP should have known that. The MAP should have set the merchant up with a gateway that would provide support for that type of business

-Corey

solly




msg:3207346
 10:27 pm on Jan 3, 2007 (gmt 0)

So is this match list an actual list maintained by some company, or something else? How would a merchant know if their company is on the list? Would they get a notice saying so? What would case a merchant to be put on this list?

Seems a bit unfair, but, we are talking about banks and financial things, so I am not surprised...

wrockca




msg:3207350
 10:32 pm on Jan 3, 2007 (gmt 0)

Checkout BankCard Central.. They maybe able to answer most of you questions and walk you through the process. Just figured I would toss out another one for you.

mdean




msg:3208670
 11:20 pm on Jan 4, 2007 (gmt 0)

What is Google Checkout? I'm completely lost. Is it like a Paypal? I see that you put their button somewhere, but where? At the checkout in your shopping cart?

mnemonik23




msg:3212216
 4:53 pm on Jan 8, 2007 (gmt 0)

I think I will try PayPal's Website Payments Standard first and see how it goes.

I see many people recommend to not spending time and money for lawyers...
In my case, would it be better to have a company or individual business? Which name should I use in all Terms and Conditions if I do not have an official company?

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