So, now you want to set up your internet merchant account. What are some things to keep in mind?
First, bear in mind that an internet merchant account is always a little more expensive than a regular merchant account. This is because there is a big difference between swiped versus non-swiped terminals.
What are the differences between the two? Well, a swiped terminal means that you physically have a credit card in hand and swipe it in a little terminal. Non-swiped means you key in the card number, expiration date, and other information.
Why the cost difference? Well, there’s always more potential for fraud when you accept credit cards online. You aren’t actually looking at the person’s card, signature, etc. You’re accepting on faith that this is the person’s correct credit card. Therefore, there is a little more risk involved with a non-swiped terminal than other types.
Some merchants have come up with the idea of getting a swiped terminal, due to the lower rates, and then keying in their credit card information, thinking that they’re beating the system. The only problem is, it doesn’t really work that way.
Most merchant services have separate rates for swiped terminals. Let’s say that your rate on a swiped terminal is 2% when you actually swipe the card. A non-swiped terminal’s rate would be, say, 3.5%. However, when you have a swiped terminal and you key in a card instead of swiping it, most merchant account providers will add an extra fee. For the sake of argument, we’ll say that’s a 2% fee. Making a long story short, that great idea that you had to get around higher fees actually leads to you paying .5% more for your credit card processing. This, of course, is less than ideal.