IPSPs Vs. Your OWN merchant account.
 

Let's talk about the pro's & con's as well as setup charges and options for both.


One of the more obvious bonuses is a lower discount rate (fees):

I haven't looked very hard yet.. but so far I found an "ADULT OK" merchant account with pricing like this:

======== Merchant Account 1 ==================
Application Fee $195 +$2000 for "High Risk"
(I think the visa/mc regs are standard everywhere

3.65% + 35cents per transaction.
5% Reserve for 6-12 months.
$0 Upfront deposit
$25 minimum monthly transfer fee.

(This is not through me or anyone I know.. jsut found it on the web..if you know of other deals please post them)
=========================================

Another benefit is I think you get the money credited to your account ~3 days after the charge is made.

One of the drawbacks of course is you would need to do your own customer support & reporting.

The thing thats funny to me about all this Visa regulation stuff is now we techinically have our own merchant accounts under the IPSPs, and they are doing Gateway+ processing for us.... the fees should be CONSIDERABLY LOWER now, because the level of service we are getting is lower (our chargeback/refund umbrellas no longer exist) and it's now up to visa if we get terminated as well as the IPSP's.

You are right about that but I don't think you will IPSPs Prices dropping

What is maximum chargeback ratio for the one you found for so cheap? One's I've found are 7% for 2-3% chargeback threshold.. but that's offshore requiring a high minimum per month

goBigtime,

You are absolutely correct about the liability issue. We can actually help you establish the merchant account for $1950 including the Visa and Mastercard registration. Not only that but Netbilling will provide you with EVERYTHING else you need including the integration, reporting, customer service 24/7/365 for you and your clients, and variable fraud scrubbing tools whcih you have control over. You are paid DAILY as well (batches settle each day). We also provide a free shopping cart if you are selling products.

Contact us to discuss your needs and we will show you our incredible system and how you can process for 50% less than what most IPSPs charge.

Toll Free within the US: (888)357-8166
Outside the US: (661)252-2456
ICQ: 117496436

Thank you, Mitch Farber

Well, since you asked?

1. IPSP?s have the financial liability.
2. The volumes on your own merchant accounts are small.
3. The services we provide are not diminished.
4. You still have protection from an ?aggregated? account in that your chargebacks may fluctuate, but we can work with you to bring them back into compliance without a fine.
5. Customer Service is key. We have 24x7 inbound toll free for most countries around the world (the US too?) and Customer Service Reps that speak, read and write in those languages.
6. If you have over ?X? count in chargebacks you are liable for a $25,000 fine.
7. Rules change and your bank may not tell you until it is too late.

There?s more, but just wanted to give you our thoughts.


C

Can we do hard goods sale also? I have a "US presence", is it sufficient to be able to setup the account, tough I am physically located in Canada?

Maybe I should call you... but I really need a "final solution". I am very exasperated by all these 3rd party processors ( Verote ( Verza), Ibill, Paysystem, Internetsecure, etc...). Always feel I go back to GO without collecting my $200.oo monopoly money....;

Thinking about going with own merchant account ourselves. We have a very low charge back rate most months its zero. With someone like netbilling they do the customer service. The third party wants you to believe you cant function without them, I worked for a guy how had a little site with his own merchant account. He had very little problems. If you are not a thief or make promises come in my site there are 700,000 pics and there are 500 instead. I dont think chargebacks are that big of a issue. Alot the numbers every month just dont seem to jive and I feel like I am still working for someone else. The reason I went full time was so I could have control over my wallet not someone else. Also there is alot less of a chance of a bank going under as opposed to a third party processor. The bank goes under you still have the customers, third party goes under you got dick. lol

netbilling is good for hard goods and high tickets

directfiesta,

We should be able to help you get a merchant account from Canada, depending on the product you are selling. Please contact me by phone, email or ICQ and let me know what you are selling and the montlhy volume you need. By the way, with tangible product sales, there is typically no registration required with Visa and MC either.

Toll Free within the US: (888)357-8166
Outside the US: (661)252-2456
ICQ: 117496436

-----------------

tony404,

Your post is 100% correct.

Thank you, Mitch Farber

And I am not Mitch's cousin he is just right lol

Thanks Tony,

I try to be right.

Mitch

I looked into this a couple weeks ago as I'm tired of ISPS' bullshit.

Here's the pros for a merchant that I see:

* control over scrubbing
* better conversions
* control over customers/rebills
* MUCH lower fees
* offshore CB threshold is 2.5% :) so please. I have never had a site with more than 0.8%.

Cons:

* fairly expensive startup cost
* most likely you will need to plan a trip to visit with the bank that will give you the merchant
* you need to have good history and transaction volume to apply for a merchant
* can't get a merchant if your business is "new".
* you'll have to buy a check printing machine and hire some dude to run to the post office with a bunch of checks to your affiliates.

if you got Customer Service reps, good affiliate software, and can handle payouts then having your own merchant account is good,

either way i think it still equals out to the 10-15 you pay anyways,

cause realistically you could pay around 5% with all the merchant transaction fees,,

your paying the extra 5-10% for the convience features,,
what sux is the reserves and waiting for the weekly payouts


i agree puremeds though that its good if you got a product to sell

it's around 8% with everything including customer support if you run via a merchant on a standard 24.95

If you are selling a tangible (shippable) good then you "must" have your own merchant account and you should not mix online transactions with that biz.

But I will tell you, my experience has observed that most WM's start out processing 3rd party and some try their own merchant account. Some, a few, are able to successfully continue their business that way. The vast majority cannot.

Over 90% of those who try to process high risk trans to their own merchant account fail within a year. Then, return to 3rd party.

This possibility has changed. The recent Visa reg's have made "returning" to 3rd party impossible. --Not a good risk model.

If you can make your own merchant account work, great. The costs, however, won't be much different from 3rd party in the long run and you assume all of the risk.

Not to mention that the number of banks willing to take that biz has greatly reduced since November 1, 2002.

I know Mitch will disagree. But, for high-risk digital content, especially in today's market, you need to process with a 3rd party processor.

Knowing how hard this is to be a 3rd party processor, I would say that allowing someone who knows processsing to handle that aspect of your biz is the wisest decision. Focus on building your business and marketing and let an entity with experience in the online processing field keep you out of trouble.

If you don't think it's tough to process trans in this areana, I invite you to think about why people complain about 3rd party processors in the first place. Then, decide if you think you could do any better. If you think you could, you should give us a call. We might have a position for you.

Rand,
Can you please elaborate on how the risk is different for processing porn using your own merchant vs. using a 3rd party under the new VISA reg.

From what I understand, if you go over a limit with a 3rd party, you get the exact same consequences if you run your own merchant account and go over the limit.

Rand, don't you ever sleep????

You coming to Scottsdale this weekend or what? Saturday is the day, the Jag, Don Johnsons cars, the first of a new production series Shelby are all going on the block....

how come u "must" have ur own merchant if u are selling a tangible item, could u pls further explain =)

thx Rand

You could still lose your ability to process either way. But with your own merchant account, YOUR creidt is on the line. If you lose your PORN merchant account and tried to open.. say a doughnut shop down the street, the TMF of the porn merchant account could prevent you from getting an account for other, more mainstream biz. I don't know for sure, but I don't think a TMF file ever goes away.

KK, I get a nap once in a while. :)

DAMN! I haven't decided on Scottsdale yet, but I would love to go! I have a friend who's already there and it would be a hoot to hang out with you too!

I'll definitly be calling you if I make it out there. I think it would be a blast!

could always hire another company to do management for the doughnut shop and they can apply for the merchant :winkwink:

Becuase as a 3rd party processor, we have no way to know if you have inventory to keep up with the orders, or, if you ship the orders. There are specific laws about "when" you can charge a credit card for shippable goods.

Did you ever order an advance copy of a DVD? The shipper does not charge you at the time you order, but instead, at the time of shipment.

This is why 3rd party accounts are not willing to accept orders for shippable product.

This is true.

And you can always get a prosthetic arm if you lose yours in a boating accident.

I'm not trying to be a smart ass, just makin' a point.

Rand,

You are correct... I do not agree. If it were true, Netbilling and other gateways would not be in business. We setup new merchants every day and help establish new high-risk merchant accounts every day as well. The banks are a bit more strict than before. However, we almost neverever lose a merchant for begin TMF'd. Also, if a merchant does get terminatede having theor own account or with an IPSP, they eill hasve a hard time processing in the future for their "donut shop". You arer also not coprrect about the cost being the same.

Netbilling merchants pay about 8% on average for credit card processing total, and they pay 3.25% and 40¢ for check processing. What does Epoch charge again? I am not saying that the merchant account model is for everyone. Neither is the IPSP, especially now that you can no longer protect the merchants under your unbrella.

Rand.... No disrepect meant to you at all. Epoch is a great company. The 3rd party IPSP model is just not as viable as it once was. Merchants demand and deserve more control these days, and we give them that ability while handling all of their customer service and all of the other aspects that IPSPs provide.

Mitch

I have to tell you Rand , we called your company and asked to speak to a salesman. The guy didnt have a clue, in fact my wife said how could they hire some like that. All the third party processors are like that ,they dont give a shit about the customer. I also called Net billing to get info and the girl was nothing but nice and helpful, she knew her stuff.That leaned us in our decission to go with a merchant account which hopefully we can swing but the end of Feb.

Tony404,

I'm sorry to hear you had a bad experience. I can not imagine what kinds of questions could not be answered or referred to another rep for response. Sales people care very much about customers because they care very much about sales.

If you still have questions, you should give me a call or drop me a line. Take care of your merchant account. If you're interetsed in having a 3rd party account as a back-up, we should talk.

How can I reach you?

tony404:
Who did you call - their name? What time did you call? What number did you call? What was your question? I need to know to look into your allegations and to correct any potential problem.. If you were not treated properly and have a question, call me.

Mitch:
Man! Can I say "spell check"? Dude! :)

KK:
Do YOU ever sleep? :)

Chris
CEO EPOCH

PS: KK... do YOU ever sleep? :)

Chris / Epoch

Please do not call me dude - dude!

ô¿ô

Mitch

p.s. Does this thing have a spell check?

epoch is top notch in my opinion, great service, great customer support. :2 cents: