Merchant Fees too high - how to receive payments from customers?

[marsmac]

Hi everyone,

Just wanted to start by saying this is a great website and forum. The newsletters are always very interesting.

I've started receiving payments for new services available on my website. As a new business wanting to keep ongoing fees low I'm having trouble finding a suitable payments system to receive money via credit card, direct debit etc.

Merchant services with the banks is expensive. CBA is the best that I've found charging around $20 - $30 per month. But at the moment I don't have a lot of transactions to make the monthly costs worthwhile.

Going through paypal or paymate is expensive for once only transactions where they charge between 3% - 5% per transaction.

I want to make it easy for customers to do business with me but merchant fees are high for a small start up business.

Any thoughts would be much appreciated.

Thanks,

Martin Fai
Lion Vending
phone: 0417 248 911
email: martinfai@lionvending.com.au
website: www.lionvending.com.au

[ray_223]

I think (from my bad memory) PayPal is 2.4% + $0.30 per transaction.

I don't think you will find a much better deal for a small number of transactions per month.

One option is to charge the customer for the credit card surcharge (maybe also consider having a direct deposit option available with obviously no surcharge). This is more manual work on your behalf but gives the customer a "surchargeless" option.

[LeelaCosgrove]

I really dislike credit card surcharges ... I mean, you WANT people to pay you via CC so that it's convenient for them AND you get paid quickly and easily ... I don't understand why so many small businesses put the surcharge on ... either raise your prices by 2-5% to cover it, or don't charge it.

If you can't afford merchant services from the bank, paypal is your best option. Paypal isn't the best ... not just fee wise, but also with the ability to get locked out of your account (happened to me once - took a MONTH to get access to my funds again! Not happy Jan!). However, it's quick and easy to set up and will work with any website.

[ray_223]

Originally Posted by LeelaCosgrove

I really dislike credit card surcharges ... I mean, you WANT people to pay you via CC so that it's convenient for them AND you get paid quickly and easily ... I don't understand why so many small businesses put the surcharge on ... either raise your prices by 2-5% to cover it, or don't charge it.

I don't like CC surcharge fees either.

I guess it depends on how many people pay via CC and how many pay by other methods.

Most payments I receive are by cheque or direct deposits. I don't think it is fair to increase everyones prices for the few who do pay via CC.

Bank transfers are so easy these days if it saves you $100-$200 (or more) why not use that method? And if you are buying some expensive product and one supplier has increased his/her price by 3% to cater for the surcharge I'll probably choose the supplier who hasn't done that, pay by direct deposit and save the 3% myself (which may be a sizable amount added up over a year - for some products I buy that will be many thousands of dollars).

[marsmac]

Thanks for your replies.

What I have discovered is that unless you are a business racking up a solid number of electronic transactions, or high $$$ worth, then the banks don't cater for your business. Its not in their interest to support small/start up businesses unless you can afford it.

In this day and age when people take 10 seconds to determine whether they close your website or not, trying to come up with good user experiences is important. i.e. good payments system. Of course, if you are offering a good enough product or service then people will buy from you regardless of how they have to pay.

[Burgo]

We have direct debit for members fees and find it quite adequate

[KarenC]

I disagree that banks aren't interested in small fry ... I have been a merchant for 20 years and I am solo. The bank charges monthly for the facility so it's not so important whether I make sales that month by cc or not. My merchant fees are $10 per month for the facility, $16.50 for the electronic Eftpos machine, and 0.73% of transactions. I actually make MOTO transactions the most - where I key in the numbers of the phone or faxed payment. An example, a transaction of $740 is $5.40 fee. A transaction of $12.00 is 89c. Any month there are no transactions, the minimum then is $26.50. I just see it as a necessary expense to offer cc facilities for payment. My cash flow is much better this way.

I also have PayPal for internet transactions as it's simpler.
Example as a comparison: PayPal transaction $13.50 is a 62c fee, or $835 is $7.50 fee.

[JodieR]

I started out with a manual (click clack machine) bank merchant account, which cost me too much.

I then went through these guys and have never looked back since:

http://www.ezegroup.com.au/ezepos_about_us.php

http://www.ezegroup.com.au/ezepos.php (page for eftpos)

I also got a discount on the sign up fees, because the forum I was on at the time generated several recommendations. It was something like $30 of the startup price. It was quite a while ago now, so my memory isn't that good.

I was able to link it to my choice of bank account (that I already had going).

I use paypal a lot online (for security reasons) - I have MOTO eftpos so I can do phone orders, and also use it for point of sale customers.

I found the fees on this MUCH cheaper than what I had with the bank. And When I spoke to the bank about upgrading to an eftpos machine they fobbed me off.

At the end of the day it's the bank that still sends me statements and processes the fees.

Highly recommend the above business and I know of many people who have also used them with satisfaction.

All depends on what you want to achieve and what you need it for. eg paypal vs eftpos. my recommendation would be that if you are only doing web sales paypal is the way to go.

You may also find that some large retail associations may offer discounted merchant facilities for being a member with them. So if you're a member of any of these groups, suss it out.

[marsmac]

Hi Karen C,

Your mechant service sounds good. Who are you with if you don't mind me asking?

[KarenC]

Your merchant service sounds good. Who are you with if you don't mind me asking?

Commonwealth - you should talk to your local manager and find out what's best for you. Obviously I'm on the smallest machine and I don't use other extra facilities that are chargeable such as selling tickets etc. The help desk is open 24 hours and they have helped me early in the morning by phone when I was having a minor difficulty recently with one transaction. I used to have a higher rate a few years ago before they introduced monthly fees for the facility, so once they introduced the monthly fees ($10 plus $16.50 = $26.50) the % rate went down considerably, which was a great help. My accountant said to think of it as a necessary operating expense which is directly tax deductible anyway.

Forgot to say that the bank automatically updates and transfers the transactions to my bank account at around 9pm each night. I don't have to do anything extra.