One Size DOES NOT FIT ALL when it comes to 3rd Party Credit Card Processors! Analyze, Compare and Review Third Party Processors.

You may have heard of PayPal and ClickBank.  Most likely you haven't heard of most of the other 38 third party processors like ProPay, WorldPay, Verotel, CCAvenue, CCBill and others.

Those who have gone by the wayside in recent years apparently are 2CheckOut,  iKobo, MyPaySystems, StormPay, DigiBuy, Yahoo! PayDirect,  and others who were active when this article was first published in 2004, 5 years BO (Before Obama as USA President - for chronological reference only).

Through extensive research, we have profiled 40 third party credit card processors and Internet Payment Service Providers (IPSP's) that are currently active and provide the service of accepting credit cards on your website, online auctions and e-mail.  See the current list at the 3rd Party Processors page of mgoldmine.com. This list was compiled to support the Maculator website which provides the service of comparing the monthly cost of processing with these processors and regular merchant accounts based on your monthly sales volume.  To our knowledge, there are no other lists available on the web that include so many third party processors and IPSP's.

Here we will categorize all the 3rd party processors and compare the features and benefits for each category.  We will also compare the advantages and disadvantages of using a regular merchant account as an alternative to a 3rd party processor.

If you're looking for a good, reliable, low-cost processor you may think that there should be one solution that stands out above all the rest?  The answer to this question is no!  The best solution for you actually depends on several factors:

• your monthly sales volume and average item price (average ticket),
• types of products or services you intend to sell,
• the country where your business or bank is located,
• the language alternatives you require for customers,
• whether you are limited in cash available for setup fees,
• whether you need marketing assistance through directory marketing or reseller affiliates and other factors.

Before we explore the robust family of alternative 3rd party processors, we will look at the standard alternative of regular merchant accounts.

Comparing Third Party Processors with Merchant Accounts

Regular merchant accounts differ from 3rd party processors in some basic ways. All third party processors include their own internet payment gateway as a basic part of their service.  For merchant accounts, the payment gateway is a separate expense item for ecommerce accounts that may cost several hundred dollars for setup fees, monthly fees of $10 to $20 and transaction fees in the range of 5 to 10 cents.  Sometimes the payment gateway is bundled in the merchant account offer.  Usually the merchant account provider gives you several options for payment gateways and Point of Sales (POS) equipment depending on your business needs.

An IPSP is a specialized merchant account that is based on internet payment services.  The payment gateway and built-in shopping cart options may not be automatically bundled with other services like they are with true third party processors. Risk programs and content support such as membership accounts may be an advantage to some merchants as compared with standard merchant accounts. Our list of 3rd Party Processors includes several popular IPSP's for comparison.

Merchant accounts also charge monthly service fees often called 'statement fees' or 'customer service fees.'  These fees range from $8 to $15 a month.  Some 3rd party processors also include regular monthly services fees, but most do not.  Instead of regular monthly fees and gateway fees, you will find that the 3rd party processors charge a discount rate on each transaction that is usually higher than the discount rate charged by merchant account providers. 

The discount rates for merchant accounts range from around 1.8% to 2.5% whereas the range for 3rd party processors varies from around 2.29% all the way to 32%.  There are also a few merchant account providers that handle high risk content, adult and offshore accounts who charge discount rates from 5% up.  Several 3rd party processors also accept high risk content and charge higher rates for these accounts as well.  We will show that it may be easier to find a high risk processor with lower rates among 3rd party alternatives than among merchant account providers.

Transaction fees tend to be higher for most 3rd party processors than for merchant accounts.  The transaction fees for merchant accounts are usually between $0.25 to $0.30 with a few exceptions (high risk or added services).  Keep in mind, that with merchant accounts you are also paying transaction fees for your payment gateway on top of your processing transaction fees.  For 3rd party processors, the fees range from zero to $5.00.  PayPal currently charges $0.30 per transaction, for example, an increase of one cent since this article was first published.  In addition, PayPal charges a 2.9% fee (discount rate) on the amount of the total transaction. This provider also has a lower discount rate than most other 3rd party processors.  Those 3rd party processors that offer zero transaction fees may charge higher discount rates from 5% to 8% or comparatively higher monthly and annual fees.

Merchant accounts also charge batch fees and minimum monthly fees which are not charged by 3rd party processors.  Batch fees are the result of payment gateway transactions which are uploaded perhaps once or twice a day to capture the approved transactions.  For each batch you may be charged $0.25 to $0.30.  You will not incur batch fees if all your transactions are swiped using POS equipment.  There are other POS authorization fees, however, that are charged based on the type of connection or phone line you use for your authorization service. 

Minimum monthly fees for merchant accounts are usually set at about $25.  These fees guarantee that the processor will get paid a minimum amount of discount revenue from your transactions regardless of your actual processing level for the given month.  If you process enough sales during the month to pay a net discount above the minimum fee, you will not be charged anything for this fee. 

The 3rd party processors actually pay all these merchant account fees themselves when they process your transactions with their own merchant accounts. They levy these charges to merchants based on (usually) more simple rate structures including a discount rate and transaction fee, and sometimes a monthly or annual fee of some kind.

Merchant account monthly costs are generally higher than the costs of 3rd party processors for lower monthly sales volumes.  This is due to the higher monthly fees charged by the merchant account providers.  The break-even point between the two depends on your monthly volume and average ticket.  With a monthly volume lower than $5,000 to $10,000, the balance usually falls in favor of 3rd party processors. 

Above that processing range, the merchant account monthly processing cost is generally lower.  To be more precise in comparing any two options, you need a customized calculator similar to the Maculator, and a few others found on the web, that allows you to enter your monthly processing figures for calculating costs.  The competition between merchant accounts and third party processors is not based on cost alone, however.  For some 3rd party processors are higher in cost than most merchant accounts. 

Since 3rd party providers actually are underwritten by regular merchant accounts as aggregators, one might ask how could the rates be lower for 3rd party processors than for merchant account providers in some cases?  Without doing a thorough discussion on this question, there are a few factors that are clearly evident. 

• For one, the 3rd party provider has one merchant account which was originally underwritten for certain types of products and risks.  There is no additional cost of applying for a new merchant account every time a new 3rd party account is established. 
• Secondly, by focusing on risk management for certain types of products and sales venues, such as auction portals or digital products, for example, the costs of chargebacks can be lowered. 
• Thirdly, the costs in one area can be offset by the revenue in others and made to favor the economic situation of the seller.  For example, a lower discount rate can be offset by higher chargeback fees, lower chargeback fees by higher discount rates or monthly fees or annual fees.  Higher transaction fees can help to offset other costs, as well. 
• Finally, by mixing higher and lower risk accounts together in the same aggregated account, the overall chargeback ratio will be lower and less costly to the processor.

The convenience factor  generally favors 3rd party processors.  There is no credit application or underwriting based on the seller's credit rating for most 3rd party accounts.  Usually, you can sign up and start processing right away on the same day.  For merchant accounts, it may take two to five days to complete the application process which is similar to an involved credit application.  In fact, the approval process involves underwriters who do very much the same types of services as done in home mortgage applications.  Because of the cost of processing the application, checking your credit and verifying the information about your business, an application fee is often charged.  Some 3rd party processors also charge setup fees, but most do not.

When it comes to retail brick-and-mortar businesses, you need a merchant account provider who will also provide you with a range of POS devices.  Several mobile phone devices for swiping credit cards are available today from merchant account providers and some 3rd party processors including PayPal. You do not necessarily need a payment gateway, unless you intend to sell products online as well as in your physical storefront.  In this case, the 3rd party processor is not useful or necessary unless you have some products or services that can better be supported by specific 3rd party processors on the web.  We will cover more about 3rd party processors that specialize on various product types below.

Merchant accounts with payment gateways generally give you more flexibility in the setup of shopping carts.  They also allow you to design your customer interface without bouncing the customer to an external payment form on another website, such as a page on the website of PayPal.  Many 3rd party processors do allow you to customize your shopping cart, however, but it is still usually clear to the customer that they have been bounced to another website.  The PayPal Payments Advanced service charges a monthly fee of $5 and the PayPal Payments Pro service, a fee of $30.  PayPal Payments Pro service allows you to use your own shopping cart for ecommerce transactions and also provides a virtual terminal.  Customers do not see a bounce to a PayPal site with the PayPal Payments Pro service.

Whether customers have more confidence in PayPal or Verotel than they do in the merchant's own shopping cart is a question of debate.  Some merchants use both a regular merchant account and a 3rd party processor on the same page and they witness that a good percentage of customers use the 3rd party processor even though the customers have a choice.  Some customers appreciate the added security of the 3rd party processor where only the processor, not the merchant,  records the credit card number of the buyer.  In either case, the processor or shopping cart system encrypts the credit card numbers securely, so even the merchant or intruders into his database, cannot easily access this information.

If you have used a particular 3rd party processor one time in the past to purchase a product, and if you had a positive experience with the transaction, you are likely to feel confident in using the same processor again on another website.  As a buyer, you may not be aware of the shopping cart provider, gateway provider and merchant account provider, all of whom having direct access to your credit card number in addition to at least two banks and one back-end processor.  The security of this complex system rests with the fact that all parties involved have more to benefit by keeping your private information secure than they do by being careless or by deliberately forsaking your confidence. 

Security, of course,  is a major concern for merchant account providers, payment gateways, shopping card providers and 3rd party providers alike.  Since there are one or two less parties involved in actually seeing your credit card information with 3rd party processors, one might argue that the potential risk for security gaps is lower for 3rd party processors than it is for merchant accounts.  This is not necessarily the perspective of your customers, however, unless you advise them accordingly.

The customer experience with 3rd party processors may be compromised by the identification of the transaction on their credit card statement.  Using a merchant account results in a credit card statement with your own account identifier, in other words, the name of your business.  Using a 3rd party processor, the customer sees the name of the processor on the statement, not the name of your business.  To some buyers this may be confusing.  If you communicate with your buyers and provide good customer service, you may be able to prevent this confusion.

Chargebacks may be handled differently by merchant accounts and 3rd party processors. In most cases, however, the merchant will be charged for the reversal of the transaction and possibly penalty fees for both merchant accounts and 3rd party processors.  Among merchant account providers, there is also a variation of the effort made to contest chargebacks to the benefit of the merchant. This variation also applies to 3rd party processors.  If you have good customer service and keep your chargebacks down to less than one percent, you will not have problems with either type of processor. 

Some merchants complain that PayPal is too likely to give in to chargeback issues in favor of the buyer rather than accept the assertion of the merchant, for example, that the product was delivered and was exactly what the buyer ordered.  Other 3rd party providers like Moneybookers, NoChex and  DigitalCandle handle all chargeback costs on their end and underwrite these costs by their regular fees to merchants.  StormPay was a 3rd party processor that allowed up to 2% for the chargeback ratio and charges a discount rate of 6.9% and a transaction fee of $0.69.  StormPay also had higher rate tiers for merchants with higher chargeback ratios.  You generally won't find a regular merchant account provider like StormPay that will allow you to continue your account with discount ratios at 2% or above! (StormPay is no longer in business as of 2006 - is this policy a factor in their failure?).

Many merchant account providers and 3rd party processors offer referral fees to affiliates who provide leads from their websites.  If you're looking for multi-tier affiliate programs with residuals there are several that we have discovered in both categories.  For example, CardService International has a 2-tier program that pays for leads and processing residuals including 10% of all income from 2nd tier affiliates.  Most other merchant account providers pay only an initial lead fee or application acceptance fee, but no recurring residuals. 

Among 3rd party processors, there are some that offer multi-tier residuals (up to 10 tiers) and many more that offer lead fees, single-tier residuals or other referral fees.  The subject of residuals for 3rd party processors will be covered in more depth below.

Many 3rd party processors also include reseller affiliate support.  This includes software and processing to enable other resellers to sell your own individual products for referral fees which fees will automatically be deducted from your revenue.  You won't find this level of service with regular merchant accounts.  Most of the 3rd party processors that specialize in digital products offer this kind of service. 

Another marketing service that is provided by many 3rd party processors, and not by merchant account providers, is directory marketing.  Many 3rd party processors host a directory tree by subject of products sold by their accounts.  The cost of this service is usually free, however, some providers require compensation or consideration of some kind.  There may also be a fee for reseller software support from some 3rd party providers.  These services will be covered in more depth below.

A number (up to 10) of 3rd party processors underwrite and invite high risk content.  Although there are also a few merchant account providers that also accept high risk content, it is generally a difficult task to identify them.  The numbers that we have seen would indicate that some of the 3rd party processors who accept high risk content may offer better rates than the merchant account providers in this category.  More details about the high risk 3rd party processors will be presented below.

One of the most peculiar differences between merchant accounts and 3rd party processors is the way they handle higher monthly volume amounts.  Most 3rd party processors with multi-tier rates give you a lower discount rate for higher monthly sales volumes.  This applies to PayPal, CCBill, CCNow, Kagi, MembershipPlus, and Reg.Net.  In some cases the rate is based on higher ticket amounts, but in general the higher the ticket or monthly sales volume, the lower the cost to you. 

For merchant accounts, on the other hand, if you exceed your declared monthly volume that you estimated when you started your account, they will either penalize you or close you down (or both).  Although you can request an increase in your monthly limit, you have to basically apologize for being successful!  And even if you request an increase in your monthly limit, they may not grant the increase or sometimes they may insist that you start all over and apply for a new merchant account with possibly higher discount rates!  The merchant account providers call this policy 'risk management.'

What the new entrepreneur needs to figure out is which kind of cost structure best suits his or her own anticipated business profile.  This includes all of the factors we've discussed above as well as the different offers of pricing structures and services among the 3rd party processors to be identified and categorized below.  Do you need the lowest cost provider, do you need a regular merchant account, or do you need the special services or features provided by some of the higher cost alternatives?  Which provider offers the lowest cost for you based on your anticipated monthly sales volume, average ticket and anticipated chargeback ratio?

Analysis of 3rd Party Processors

Product Specialization

Some 3rd party providers focus on certain products such as software, digital products or membership services.  Others will exclude products that are considered high risk.  Most processors will publish a list of restricted product lines.  Since the process of setting up an account with a 3rd party processor is less involved than it is with a merchant account provider, some sellers fail to look at the list of restricted products before they actually start taking orders.  Others may feel that they can get away with violating their agreement.  There have been some very unfortunate experiences by merchants who have had accounts frozen by processors because they sold products on the restricted list.

The smaller group of 3rd party processors who actually invite high risk content also have a list of unaccepted products such as those that are illegal or inflammatory. High risk content may include product lines such as adult, gaming and pharmacy.  These processors may also be identified as having "offshore" banks who underwrite their accounts.  The bankcard industry does not forbid these products but members like Visa and MasterCard require higher interchange rates and other special requirements for processing.  Most acquiring banks, especially in the U.S.A., are not in the business of underwriting these types of accounts. 

A new ecommerce business may start the search for a processor by focusing on product specialization.  If your products are digital such as ebooks, for example, you may choose to look for a processor that specializes in digital products.  If the contents of your ebooks are adult-oriented, however, you should look for a high risk content specialist.  Most high risk specialists are also digital specialists but the reverse is not true.  You may get lower rates for the non-specializing processor, but you would not get the downloading support or the marketing support most of the specialists provide.  To help you in your search, the product specialists will be identified below.

Digital specialists can be subdivided into three sub-categories:

1. software specialists
2. other media and information content that is not high risk
3. high risk content including membership services

Those that focus on software provide extra services including registration of software as well as downloading services and marketing support.  Software specialists include Reg.net, RegNow, Share*It, and SWREG. 

Marketing support starts with directories which list your products based on content categories.  A buyer may browse these directories and download as well as register or purchase your products directly online.  Most also provide software support for reseller affiliates who sign up to sell individual products that you list.  Discount rates vary from 5% to 20% for these software specialists.  For some, the downloading service may be an extra fee and many also include the service of fulfilling your order by shipping out a CD by mail.

Non-software digital specialists that do not accept high risk content include ClickBank and Kagi.  These specialists provide downloading services, marketing support and directory listings for your ebooks, information content, image files and membership services. Kagi and others also provide shareware registration services for software products and other digital products like the software specialists identified above. Discount rates for these specialists vary from 4% to 32% and most charge a setup fee ranging from $30 to $50.

A few digital specialists also accept high risk content, although not exclusively.  These are CCBill and MembershipPlus.  CCBill and MembershipPlus have multiple rate tiers and their discount rates range from 11.5% to 23%.  These processors focus on web content and also provide a special array of risk reduction services to lower the costs of chargebacks.

Other high-risk accepting processors are not digital-only and include iBill, InstaBill,  Moneybookers,  andVerotel.  To some extent their supported products are digital in that they include web content, membership and image downloads.  Moneybookers is exceptional because it is both a pre-paid account and a card-processing service in one and its merchants have a wide diversity of non-high-risk content.  For pre-paid Moneybookers account buyers the rate charged to sellers is only 2%.  For buyers who use pre-verified cards, the discount rate is 5% and for unverified cards the rate is 8%.  The rates range from 4.95% to 16% for the remaining high-risk accepting processors in this group.

One processor named Affero has exclusive ownership of its own specialty in accepting donations for various causes and parties including content providers, publishers and bona-fide non-profit organizations. Affero charges a discount rate of 6% and a transaction fee of $1.00.  Affero also includes a forum for discussion on worthy causes.

Non-Specialized Content Processors

By default, the remaining 3rd party processors not specializing in any category mentioned above include CCAvenue, CCNow, Kagi, Moneybookers, MultiCards, NoChex, PayMate, PayPal and ProPay.   We have included Kagi and Moneybookers in this list even though they have been grouped above because of the diversity of products they support. 

Although these generic processors are not focused on specific content, they can be categorized in different ways including:

• variations in restricted products,
• processing costs, rate levels and fees,
• international trade support,
• country of origin,
• marketing support,
• affiliate opportunities and
• other features.  

We will review the processors with special features in these categories below.

Restricted Products

The generic content processors all have lists of products that are restricted from sale using their services. As an example, the products that PayPal restricts are listed here:

Academic Software
Adult Material/Mature Policy
Aggregators
Alcohol
Animal and Wildlife Products
Artifacts, Grave-Related, and Native American Crafts
Authenticity Disclaimers
Autographed Items
Automobiles
Batteries
Bootleg Recordings
Contracts and Tickets
Counterfeit Currency and Stamps
Counterfeit Items
Credit Cards
Drug and Drug Paraphernalia
Electronics Equipment
Embargoed Goods, Prohibited Countries
Event Tickets
Faces, Names, and Signatures
Firearms, Ammunition, Replicas, and Militaria
Fireworks
Food
Freon and Other Refrigerants
Games Software: Sony, Sega, and Nintendo
Government IDs and Licenses
Hazardous, Restricted, and Perishable Items
Human Parts and Remains
Industrial Solvents
Importation of Goods Into the United States
International Trading - Buyers
International Trading - Sellers
Lock-Picking Devices
Lottery Tickets
Mailing Lists and Personal Information
Malls
Medical Devices
Mod Chips
Money Transfer Companies
OEM Software
Offensive Material
Pesticides
Plants and Seeds
Police-Related Items
Postage Meters
Precious Metals
Pre-Paid Debit Cards
Pre-Selling Products
Prescription Drugs and Devices
Promotional Items
Pyramid, Multi-Level Marketing, and Get-Rich-Quick Schemes
Real Estate
Recalled Items
Satellite and Cable TV Descramblers
Slot Machines
Stocks, Bonds, Securities, and Related Certificates
Stolen Property
Surveillance Equipment
Tobacco
Travel
Unauthorized Copies
Used Airbags
Warranties
Weapons and Knives

This list may be updated by PayPal at any time.  Please visit PayPal for a more recent PayPal Acceptable Use Policy statement. Each of  these items are categories that link to specific restrictions and guidelines which is identified as the PayPal Acceptable Use Policy.  Keep in mind that each processor has its own list.  Before you sign up with any 3rd party processor, make sure you examine the appropriate lists of restricted or prohibited products and make sure that your products are not included. 

If your intended product line is included in a restricted list like this one, take a closer look at the processor's acceptable use policy for additional clarification.  If you can't find a generic processor that accepts your product line without restriction, you may need to pursue the services of a high risk content specialist.

Cost Factors

A number of third party processors have complex multi-tier pricing structures (count 12) as mentioned above.  Effective August 8, 2004, for example, PayPal has expanded its pricing structure from 2-tiers to 4-tiers.  What this means to you is that if you want to know what rates you will have to pay, you need to estimate your monthly sales volume and average ticket and determine the tier that is appropriate.  Then you have to calculate the monthly costs accordingly. 

Several providers also have setup fees (count 11) and annual fees (count 3), which fees also need to be broken down to monthly costs in order to get a comparable number by month for all the alternatives that interest you.  We will not go into the calculations and all the details here since these rates and the means to calculate the monthly costs for all of the 3rd party providers are provided by the Maculator.  The Maculator is the only merchant account calculator that we know of that distributes the setup fees into 24 months in order to compare monthly costs for providers with or without setup fees. 

The processors with multiple rate tiers include CCBill (4), CCNow (2), Kagi (15), MembershipPlus (2), PayMate (2), PayPal (4) and Reg.Net (2).  These pricing formulas are based on monthly sales totals, item sales prices or both.  Some processors also have a minimum discount fee for each item including Affero ($1.00) and RegNow ($2.00).

The 3rd party providers with setup / application fees include CCAvenue ($200 or $600),  ClickBank ($49.95), RegNow ($9.95), RegSoft ($9.95) and VolPay ($250).  Those with more than one setup fee have different plans with lower rates for higher fees.  The 3rd party processors with annual fees are CCAvenue ($60 or $120)  and ProPay ($35).

Some merchants may be interested in the selection of 3rd party providers with no setup fees, annual fees or monthly fees.  This free fees group includes Affero, CCBill, Kagi, MembershipPlus, Moneybookers, NoChex, Paymate, PayPal, Reg.Net, Share*It, SWREG and Verotel.  hese free fees providers are attractive to many merchants because you never pay any fees until you make a sale.  With the Maculator you can quickly select 3rd party processors with free fees or low discount rates.

International Trade

Several 3rd party providers are based outside the United States.  These include CCAvenue (India),  FastPay (UK), Moneybookers (UK), NoChex (UK) and PayMate (Australia).  NoChex caters to merchants with banks in the UK.  Moneybookers supports international trade for buyers and sellers.  CCAvenue is based in India but also supports international trade for buyers and sellers.  PayMate supports sellers in Australia and buyers around the world.

Other processors based in the United States that support international trade for sellers with banks outside the United States include InstaBill, Kagi, PayPal, Share*It, SWREG  and Verotel. 

Also critical for international trade is multi-currency support.  Although there is a significant overlap among multi-country and multi-currency support, not all multi-country providers have announced multi-currency support.  Those that have include 2CheckOut, BTClick&Buy, CCAvenue, DigitalCandle, FastPay, iKobo, InstaBill, Kagi, MoneyBookers, Multi-Cards, MyPaySystems, NoChex, Pay-Line, PayMate, PayPal, Reg.Net, RegNow, RegSoft, Share*It, SWREG and VolPay.

Multi-language support for shopping carts and purchase forms is critical to international trade.  Yet many multi-country and multi-currency processors do not provide multi-language support.  Our research identifies the following as providing multi-language support: Kagi, MembershipPlus, Share*It and SWREG,   Many of the specific languages, countries and currencies are identified in the Maculator listing.  The Maculator allows you to select providers for multi-countries, multi-currencies or multi-languages.

Affiliate Opportunities

In many cases, affiliate opportunities can add an extra revenue stream to your business as long as it does not conflict with your presentation or confuse your customers.  You don't want your customers to question the value of your main product line by hitting them with a lot of annoying popups or banners everywhere they look.  Half of the 3rd party processors identified above offer some kind of affiliate program.  All of them are free to join and some automatically qualify you as an affiliate just by signing up as a reseller. 

These programs work as referral sources that create valuable leads for the affiliate providers.  You refer your customer sometimes automatically when your customer buys your product using your normal purchase button.  If your customer later decides to use the same service to sell his own products, you may get a referral fee. 

Many offer a one-time flat referral fee for referring customers who sign up.  In most cases you will have to use a different referral link to benefit from the affiliate program than the payment link or button you use to sell your products.  The Maculator allows you to easily identify those providers who offer affiliate opportunities.  Since these programs have a variety of different terms, it's important to examine the details before you participate.

Where to Start?

To summarize, we have shown a positive approach to finding the best processor for your money by starting with product specialists, depending on your product line.  It's also important to examine the published lists of restricted products to narrow down your selection even more.  Special features like multi-countries, multi-currencies and multi-languages may also be critical to your success.  If you anticipate problems with chargebacks, you may need to examine the chargeback policies of the remaining selection in your search.  Finally, costs, upfront fees and special benefits such as affiliate opportunities, marketing support and other features may help determine your preferred hot list.  In all cases, be sure to read the fine print and make copies of all agreements before taking the final step.

Looking Ahead

As our research has unfolded we have noticed a few recent changes that may be the consequence of competition among the 3rd party processors identified above.   PayPal has effectively raised the bar effective August 8, 2004, for merchants to qualify for their lower rates by requiring $10,000 in monthly income instead of the previous $1,000 requirement. In more recent years, PayPal has added more programs with different rates for professional businesses with their own shopping carts.

Since Visa and MasterCard raise their interchange rates every year (usually around February), it's not surprising that the 3rd party processors will also have to share these increased costs with their customers.  Despite these increased costs, in our opinion, there is still room for adjustments in fees more favorable to merchants especially for those providers whose fees are significantly higher than the norm. 

This leads us to believe that the informed consumer who carefully examines the best options available based on his or her particular business profile can have a significant impact on the field of competition among the many, diverse entities.  In future articles, we hope to report that the outlook for ecommerce entrepreneurs is looking even better! 

This article may be re-published in its entirety as long as the following information and links are included.

Ray Cruz is the analyst and developer of The Maculator which is located at www.mgoldmine.net .  On this site you will also find a collection of several other merchant account calculators.  Other e-commerce information compiled by Ray Cruz is published at the Merchant Goldmine and Cardsettle.com.  Copyright (c) Ray Cruz 2004-2013 All Rights Reserved.