

How to get a merchant account - a series of hoops - swombat
http://danieltenner.com/posts/0006-how-to-get-a-merchant-account.html

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asmithmd1
I just recently had very good luck with <http://paysimple.com/> They acted as
the "friend" wheb applying to the bank who has been there and done it before.
They took a look at my website before submitting it and warned me that banks
would not go for an annual subscription - keep it monthly among a couple other
pitfalls.

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lsb
That was pretty interesting, but left me wondering, if you're selling web
services, why would one get a merchant account, versus signing up with Amazon
Simple Pay or Google Checkout or Paypal? It seems like there, all you need is
a bank account to dump funds into, and a little button on your site to send
people to give their CC details to A/G/P.

I haven't processed CCs before, but I'd love to hear people's stories about
it.

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vaksel
Paypal, Google Checkout, ASP aren't really professional enough. You can offer
them as options, but you need to have a legit merchant service to gain user
confidence.

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jhancock
I would like to hear more on this. Amazon and PayPal have similar published
fee structures for low volume accounts. Over half the things I buy online use
one of the big 3 or 4 "gateways". My feeling is that by buying through them I
am getting more protection. I certainly like the fact that my credit card info
isn't sitting around on many small mom and pop biz mysql DBs.

Are there any metrics showing my intuition is not correct?

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simonk
That's what the article is saying if your storing it on "small mom and pop biz
mysql DBs" they won't let you get a account.

You may buy through Paypal; but, most buyers don't.

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jhancock
That's what I'd like most substance on: most buyers don't like PayPal. This is
counterintuitive to me as PayPal, et al. is adding an extra layer of assurance
to the buyer on top of their credit card.

I am very interested in any metrics that show using a well known branding like
PayPal, Amazon, Google, etc.. gets less transactions than having your own
Vias/MC gateway.

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maccman
I've been trying to obtain a merchant account for a US business I've started.
Problem is, I'm a UK citizen, not a US one. Although I've got a US company and
bank account, I've found every merchant requires a Social Security number
(because of the Patriot act). I'm wondering what to do next - and whether I
have to set up a UK company just to do the payment processing!

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dhyasama
A federal tax id can usually be used in place of SSN.

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aristus
The banks I've talked with want the SSN of someone who can qualify for a
revolving line of credit equal to your transaction volume. ie, you want to do
30K of money per month, you have to be wealthy enough to swing a $30,000
unsecured bank loan. The "reserve balance" thing is no longer being offered.

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maccman
The standard is to require a signature (or two) of a guarantor. I don't think
they actually check the guarantor's bank account or credit limit though. That
said I've only gone to dedicated merchants, and not banks.

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sachinag
We got our merchant account from Chase Paymentech, and I wish we'd have just
gotten it through PayPal directly. It's a two-step process. First, sign up for
Website Payments Pro: [https://www.paypal.com/us/cgi-bin/webscr?cmd=_wp-pro-
overvie...](https://www.paypal.com/us/cgi-bin/webscr?cmd=_wp-pro-overview-
outside) That comes with something that looks like an internet merchant
account. Then sign up for Payflow Pro (the former VeriSign gateway):
[https://www.paypal.com/us/cgi-bin/webscr?cmd=_payflow-pro-
ov...](https://www.paypal.com/us/cgi-bin/webscr?cmd=_payflow-pro-overview-
outside)

Here's their FAQ on the matter: [https://www.paypal.com/us/cgi-
bin/webscr?cmd=_payflow-pro-fa...](https://www.paypal.com/us/cgi-
bin/webscr?cmd=_payflow-pro-faq-outside#Does_Payflow_Pro)

PayPal won't support you against chargebacks, and they cost more, but if you
want to get set up without the headaches of applying to a bank, they're a
great option.

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zaidf
In past I've applied for merchant account through a middle party(there are
tonnes across the web) that deals with the bank and authorize.net. It hasn't
been a problem.

I wonder what the process is like if you directly go through a bank.

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dhyasama
I work at a payment processor (PowerPay) and we typically approve or deny
applications within a day as long as we have all the required information.

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zmonteca
That's great to know!

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mcav
If you _don't_ store CC numbers -- i.e. you use your gateway to store that
information -- does it make the merchant account application process any
easier?

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swombat
Both yes and no.

In my experience, the bank _will_ trust you if you say that you've implemented
a secure, PCI-DSS way to store credit card details. They'll also trust you if
you say that you store the numbers on the gateway.

The important thing is to convey that you're aware of the issues, and you've
dealt with them.

There is a liability issue with storing card numbers on your own servers,
which, iirc, is that if you are breached, the numbers are stolen, and you are
subsequently investigated and found not to be in compliance with PCI-DSS, you
could lose your merchant account.

~~~
gommm
..additionally to losing your merchant account, you may also pay heavy fine to
visa and mastercard from what I've read

I've been looking at those things lately since I'm working on an ecommerce
platform and it will be my server dealing with the my customers (who sell on
my platform)' gateway... It's rather complicated..

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aneesh
What's the best way if you're a non-profit? Are there any banks or credit card
processors who would waive fees for non-profits?

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bravura
If I am interested taking pre-orders on selling an item, but don't want to go
through the hoops of a merchant account, what is the other options for
accepting payment?

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aneesh
PayPal, Amazon's payments API, or Google Checkout. And possibly others I don't
know about.

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ErrantX
Great post! I specifically like how it is written non-regionalised :) so the
advice applies pretty much anywhere.

+1

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gommm
"Do you pay commissions to affiliates? You’re automatically a higher fraud
risk." Why is that? I can understand the reason for the other fraud risks but
I don't see why paying commissions to affiliates is a fraud risk....

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swombat
Because then there is an obvious way to make "clean" money out of stolen
credit card numbers via your service.

This is not an insurmountable problem, but it does mark you as a likely target
for all sorts of internet fraudsters that would otherwise not be bothered
about yet another project management application.

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swlevy
Even with your own merchant account, I would strongly advise against trying to
run your own affiliate program (I've tried). There are just a host of legal
and tax issues that will consume your time. Many of the largest sites (among
them Netflix) still outsource their affiliate programs.

~~~
gommm
What company do you recommend for outsourcing my affiliate program?

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tlrobinson
Also: [http://stakeventures.com/articles/2009/03/24/how-do-go-
about...](http://stakeventures.com/articles/2009/03/24/how-do-go-about-
getting-a-credit-card-processor)

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datums
I use cdgcommerce.com. I've tried a few different providers and they have been
very helpful in answering my questions and you have the option of using their
gateway or authorize.net

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arjungmenon
I think at least for the initial startup period it would be a good idea to
rely on Paypal or some similar service. The hassle of getting a merchant
account might in some cases eat up too much of the founder(s)' precious time.
Some successful retailers (like this indie game one:
<http://2dboy.com/games.php>) continue rely on Paypal though they have a large
user base. I think the best time to get a merchant account would be once the
sales start rising above something like 10K/month or so. In that way, you'll
(hopefully) have an account before your sales (again hopefully) hits 100K or
so.

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zmonteca
In terms of merchants, who can you say has been the best and easiest to do
deal with?

