To accept credit cards online, you must establish a merchant account with an online credit card service provider. Your “merchant account provider” (MAP) will verify the credit card, process the transaction, and deposit the funds into your bank account, usually within a few days. Of course, your MAP will charge you fees for this service. The thing to be aware of is that these fees can add up, and some MAPs make a killing out of unexpected and unexplained costs, contingency fees, and penalties. The most common fees and costs to be aware of are these (Remember Strauss’ First Rule of Negotiations: Everything is negotiable. Be sure to negotiate all of these numbers; merchant account fees and charges are not carved in stone):

  1. Internet discount rate. An Internet discount rate is a fixed percentage taken from every online transaction, usually two to three percent.
  2. Transaction fee. MAPs typically have fixed charges, usually between $0.25 and $0.70 per transaction. If you are going to sell many low-priced items on your site, the higher transaction costs can wipe out your profit quickly.
  3. Monthly fees and minimums. A variety of charges are levied on a monthly basis, including statement fees, monthly minimums for total charges, excess usage fees, and others.
  4. Holdbacks and charge backs. Your MAP may reserve a percentage of your transaction receipts to cover contested charges.
  5. Setup and equipment. Setup fees are often only a small portion of total setup costs. But make sure you understand the hardware required, the software needed, installation fees, programming costs, and other setup charges.
  6. You should also ask about these simplified, comprehensive systems many MAPs are now offering that include a “shopping-cart” program, order verification and processing, and automated shipping of orders straight to your email account.

Once you understand all of this, there are three additional steps to the MAP dance:

Step one: Have a secure server. You must reassure your Web customers that their secrets are safe by processing their orders through a “secure server,” which encrypts the data exchanged in processing their order. Speak with your ISP about this.

Step two: Research Your Options. There are hundreds of MAPs out there willing to establish merchant accounts for Internet businesses, and more are joining the market all the time. Some to check out are:

Step three: Choose your provider. Pick a MAP, but as you do, also check with your bank to make sure they are set up to receive the payments from the MAP you choose.

Merchant accounts should not be an obstacle to setting up shop on the Internet. With a little research and planning, acquiring a merchant account can be fairly easy and inexpensive.

Editor’s Note: Even though this article was written just a few years ago, with the proliferation of businesses selling online, setting yourself up to accept credit cards has become much easier. Talk to your existing business about this first.

Today’s Tip: Sometimes a mentor can make all the difference in your small business. (The word mentor, by the way, is derived from Homer’s epic poem, “The Odyssey” in which Odysseus’s servant, Mentor, serves as a wise advisor and teacher to Odysseus’s son.) Here are a few places to find one of your own:

  • Women entrepreneurs may want to check out the Women’s Business Development Centers or
  • Anyone can use the Service Corps of Retired Executives program to find a business mentor.
  • AvatarSteven Strauss

    Steven Strauss is a contributor to Bplans.