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Preface: I've done a search but couldn't find any concrete recommendations. I'm hoping someone can reply or PM me based on this inquiry - thanks!
After concentrating on growth for the past few years, we finally have enough time to really look at other areas to trim costs in our business. One area is merchant account fees. We are a 100% online business processing around $150,000-$175,000/month right now and growing 150-250% a year. We are currently with CardService at the following rates:
Visa/MC/AMEX Base: $0.2599/transaction
AVS Fee (All): $0.05/transaction
Visa/MC Qual: 2.20%
Visa/MC Non-Qual: 3.75%
Appx Qual/Non-Qual Mix: 62.5%/37.5%
AMEX: Actually don't know this off the top of my head and our accountant is not reachable this week... I think it is around 3.5%.
Batch Settlements, Customer Service, etc: ~$20.00/month
Avg Transaction Size: ~$115.00
We've had around 8-10 chargebacks in the past year, all summarily dismissed once the customer figured out their mistake. None of the chargebacks were for large amounts.
All things considered we pay about $0.033 on every $1 we take in. We've talked with CardService about lowering the rates, but they don't seem to be too helpful. I'd like to talk to some other companies about what they could offer us. We'd switch if we got a good enough deal, but it would also be nice to be able to tell CardService what we can get and see what they would then do to keep us around.
If anyone wants to post some suggestions based on experience with online companies doing a similar volume to mine, I'd be most appreciative. If you don't want to post, shoot me a PM and I'd be just as appreciative!
Thanks in advance!
We have been with CardService International for more than 6 years, and our rate is actually a little bit better than you (2.29% + 0.259 per transaction). However I do not like CardService because:
1. linkpoint gateway runs down for maintainance almost every Sunday early monrning for 4 hours; the gateway often has this and that kind of problem;
2. too many hidden fee. Almost 50% of our VISA transaction is mid-qualify or non-qualify transaction so the rate is upto 4.2%
3. their customer service is very bad;
Recently I decided to transfer to Paypal Pro. We have used Paypal standard web payment for more than 6 years; Paypal Pro is different from the standard payment program.
I like Paypal Pro much better:
1. lower rate. Currently we receive 2.2% + 30 cents one flat fee for all different type of credit card; There are no any other hidden fee, except for the monthly $20 gateway fee (Linkpoint is $30, in addtion to other various fee)
2. One stop: you do not have to check your statement from mychantoffice.com and AMEX, Discover websites.
3. Much better customer service. Your transaction volume will honor an account manager from Paypal. The account manager is just like a customer service reprentative who is specially designed for you. My account manager is very knowledgeable and helpful.
4. Paypal is very reliable. Your gateway will not be down weekly.
5. If you join the money market, you can get 5%+ interestes (dividend). The earnning is even better than CD deposit account. If you use your Paypa Debit card for purchase, you receive 1.5% cash back too.
6. Paypal has much better system for anti-fraud. As I understand, linkpoint does not have any.
Another one you can check echo [snip]. CardService declined my request to lower the rate, then I talked to Echo. Echo can provide matched and a little bit lower transaction rate but I skipped them.
I hope the information is helpful. If you search my messages in webmasterworld.com, you will find I asked the same question as you. I think I find a good one now.
If you decide to choose Paypal, you can sign up at:
(It is a referral link which I can get credit from Paypal. If it violates the policy of this website please remove it. I do not have much interest to earn referral fee but I will not decline it if I can get)
[edited by: minnapple at 5:05 am (utc) on July 14, 2007]
[edit reason] no urls please [/edit]
now, if you are willing to put up with a little trouble, Nova through Costco offers less than 2% last time I checked.
E-online data (PM me for deals)
Citibank/Chase (cant remember which) advertised recently that they will match any offer.
bid--this is often the best option. first ask your supplier for lower rates, then shop the competition and bid out the best price. PM me for additional info...
Thanks for the replies to this thread and the PMs. Just wanted to follow up on how it turned out for us for any future viewers of this thread. We ended up getting (4) outside quotes of varying rates. The issue we ran into is that all of the quotes we received were not that great initially but *all* of them would match or beat any other quote. It's almost a passive collusion sort of thing from what we ran into. In the end we just told our current merchant account supplier we had an interchange plus 30bps + $0.10 offer and they were happy to match it, even without a documented outside quote. From my continued research, this rate is pretty fair for our processing level. Once we surpass $5M/year sometime in the next 12-18 months (hopefully), I'll go back to push for something closer to 20bps.
Thanks again to everyone pointing me in the right direction. A few hours of work and some help from you all will literally save us tens of thousands of dollars every year.
I also ran across this site which is a great resource for those who want to learn more about merchant accounts and how they work:
In the end we just told our current merchant account supplier we had an interchange plus 30bps
and I said a month ago.....
With that volume you should look at an Interchange-plus pricing schedule.
;) Oh well, I'm glad that you've found a good rate. With that volume you should *never* be on anything but an interchange-plus schedule.
Just a note about the link posted - The electronic payments industry is a very complicated and ever-changing thing. People that research accounts for their own business and then write tutorials with the best of intentions may inadvertently do more harm than good.
The BEST impartial resources for any business that I've seen thus far is the information offered by VISA and MasterCard. Both brands have entire sections of their sites and vast amounts of helpful information for all types of merchants.
The banks just pushed thru new charges for all the club cards and discount cards. Our cost the last 2 months was about 4.3%. We were about 3.2% but the extra charges are killing us. BTW we had had no charge backs in years.
Costco about the same as wells, might shave 2/10ths off base but the extra charges would still apply.
Interchange Plus: Might save a 3/4% overall as you pay the interchange rate first, then you get hit with all the extra charges at a cheaper rate.
Switched to Paypal. Took a little API work, but runs smooth and takes Amex and Discover which we shunned because of the rate. Our goal is to spend everything on our paypal debit card and save an additional 1.5%.
Oh also they have a virtual terminal for phone and large wholesale orders that works great.
So far so good. I have read the horror stories, but I have to say they (Paypal Reps) were very helpful. I am actually surprised that 15% have chosen Amex and about the same have choose paypal.